Although economic reform has brought remarkable progress in poverty reduction in Vietnam,
the scale and depth of ethnic minority poverty in Vietnam presents one of the major
challenges to achieving the targets for poverty reduction set out in the Socio-Economic
Development Plan, as well as the Millennium Development Goals. We first review a series of
monetary and non-monetary indicators which show the living standards of the ethnic
minorities are improving but still lag seriously behind those of the majority Kinh-Hoa. The
minorities’ lower living standards result from the complex interplay of overlapping
disadvantages, which start in utero and continue until adult life. Next an analysis of the
drivers of the ethnic gap, in terms of both differences in characteristics and differences in
returns to those characteristics, is undertaken. Mean and quantile decompositions show that at
least a half of the gap in per capita expenditure can be attributed to the lower returns to
characteristics that the ethnic minorities receive. The reasons underlying such differences in
returns are discussed, drawing on both quantitative analysis and the large number of
qualitative studies on ethnic issues in Vietnam. Finally, some of the short and longer term
policy measures which we believe could help to counter ethnic disadvantages in the nutrition,
education and employment sectors are discussed. We also emphasize the importance of
promoting growth that is geographically broad and socially inclusive − without which, the
current disparities between the Kinh-Hoa and the ethnic minorities will continue to grow.