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From Poverty to Power Green, Oxfam 2008 - weman

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3 POVERTY AND WEALTH GOING FOR GROWTHSecond, Viet Nam has been far more successful in redistributingresources <strong>to</strong> poorer regions and maintaining high levels of publicspending in education, health, water, and sanitation. In contrast,China opted for ‘fiscal decentralisation’, limiting central governmenttransfers <strong>to</strong> poorer provinces, leading <strong>to</strong> a widening gulfbetween dynamic coastal regions with their booming exportindustries and a largely neglected interior. (This is something theChinese government has sought <strong>to</strong> correct through its ‘Go West’programme of encouraging investment in infrastructure awayfrom the coast).Third, Viet Nam’s recent his<strong>to</strong>ry of war and national threatreinforces a strong collective sense of ‘national mission’,imbuing the country’s Communist Party with a sense of nationallegitimacy.Enormous challenges await both countries as they seek <strong>to</strong> buildon their achievements. Viet Nam’s accession <strong>to</strong> the WTO in 2006will constrain the government’s ability <strong>to</strong> use subsidies and otherelements of industrial policy <strong>to</strong> guide the economy and redistributewealth. The country must also deal with increasing inequalitybetween its ethnic minorities and the Kinh majority, rampantcorruption, and the increasing need for political participation.If anything, China faces even more extreme versions of thesechallenges, and on a grander scale.Source: P. Chaudhry (2007) ‘Why Has Viet Nam Achieved Growth With Relative Equity, andChina Hasn’t?’, internal paper for <strong>Oxfam</strong> International; Le Quang Binh (2006) ‘What HasMade Viet Nam a <strong>Poverty</strong>-Reduction Success S<strong>to</strong>ry?’ background paper for <strong>Oxfam</strong>International.A developing country’s success or failure at achieving growth isincreasingly linked <strong>to</strong> its ability <strong>to</strong> participate in international trade.Global trade is booming, growing much faster than the world economyas a whole. Global exports of manufactured and agricultural productsincreased by 15 per cent in 2006, <strong>to</strong> a value of $11.8 trillion. Trade inservices such as banking and <strong>to</strong>urism rose by 11 per cent, reaching$2.7 trillion. 180Not surprisingly, trade is heavily skewed <strong>to</strong>wards the rich andmiddle-income countries (including better-off developing countries).Today, for every $100 generated by world exports, $97.28 goes <strong>to</strong> the185

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