Poverty reduction and migration in rural Vietnam: Role of local firm clusters

Author:

Thanh Pham Tien1ORCID,Saito Katsuhiro2

Affiliation:

1. Faculty of Business Administration, Ton Duc Thang University Ho Chi Minh City Vietnam

2. Department of Agricultural and Resource Economics University of Tokyo Tokyo Japan

Abstract

AbstractFirm clusters are considered as a contributing factor to local economic development. However, there are limited studies on the effect of firm clusters on the well‐being of rural communities, particularly in terms of income improvement, poverty reduction, and migration. Our research aims to shed light on these relationships at both the household and commune levels. For empirical analysis, we employ the propensity score matching method to mitigate endogeneity bias. Our results reveal the role of firm clusters in increasing income and reducing poverty. Firm clusters also contribute to decreasing labor emigration and attracting immigrants. However, the magnitude of these impacts is relatively small, with moderate effects on income and modest effects on poverty and migration. In particular, firm clusters reduce the commune poverty rate by around 2.36%–2.51% and enhance household annual income by approximately 16.46–17.08 million VND (725–752 USD). Furthermore, analyses at the household level highlight the significance of larger clusters in improving household income. Our research underscores policy implications for rural development with a specific emphasis on firm clusters.

Funder

Japan Society for the Promotion of Science

Publisher

Wiley

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