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Are Returns to Investment Lower for the Poor? Human and Physical Capital Interactions in Rural Vietnam

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  • Dominique van de Walle

Abstract

If the gains from investment depend on knowledge, but households cannot hire skills, then poorly educated households will achieve lower returns than educated ones. If the income‐poor are less well educated, then they will also have lower returns to investment. The paper tests this argument for the case of irrigation in Vietnam, a setting where existing irrigation can be treated as exogenous at the household level with appropriate controls for the determinants of facility placement. Strong complementarities between household education and irrigation expansion suggest that, unless disparities in education are redressed, reforms will generate an inequitable growth process in Vietnam.

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  • Dominique van de Walle, 2003. "Are Returns to Investment Lower for the Poor? Human and Physical Capital Interactions in Rural Vietnam," Review of Development Economics, Wiley Blackwell, vol. 7(4), pages 636-653, November.
    • Handle: RePEc:bla:rdevec:v:7:y:2003:i:4:p:636-653
    DOI: 10.1111/1467-9361.00214
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    1. Dominique Van De Walle & Dorothyjean Cratty, 2004. "Is the emerging non‐farm market economy the route out of poverty in Vietnam?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(2), pages 237-274, June.
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    Cited by:

    1. Leandro Carvalho, 2010. "Poverty and Time Preference," Working Papers WR-759, RAND Corporation.
    2. Torero, Maximo, 2014. "The Impact of Rural Electrification," MPRA Paper 61425, University Library of Munich, Germany.
    3. Lucia Mangiavacchi & Paolo Verme, 2013. "Minimum income in a transition economy," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 21(4), pages 683-712, October.
    4. Siegel, Paul B., 2005. "Using an asset-based approach to identify drivers of sustainable rural growth and poverty reduction in Central America : a conceptual framework," Policy Research Working Paper Series 3475, The World Bank.
    5. López-Bazo, Enrique & Moreno, Rosina, 2008. "Does human capital stimulate investment in physical capital?: Evidence from a cost system framework," Economic Modelling, Elsevier, vol. 25(6), pages 1295-1305, November.
    6. Scott R. Sanders & David L. Brown, 2014. "Escaping Poverty in Post‐Socialist Vietnam: Does Place Matter?," Poverty & Public Policy, John Wiley & Sons, vol. 6(4), pages 332-353, December.
    7. Tewodaj Mogues, 2011. "The Bang for the Birr: Public Expenditures and Rural Welfare in Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 47(5), pages 735-752.
    8. Jean-Louis ARCAND & Béatrice D'HOMBRES & Paul GYSELINCK, 2004. "Instrument Choice and the Returns to Education: New Evidence from Vietnam," Working Papers 200422, CERDI.
    9. Escobal, Javier, 2005. "The Role of Public Infraestructure in Market Development in Rural Peru," MPRA Paper 727, University Library of Munich, Germany.
    10. Kafle, Kashi & Balasubramanya, Soumya, 2021. "Irrigation for Reducing Food Insecurity: The Case of Niger," 2021 Conference, August 17-31, 2021, Virtual 315099, International Association of Agricultural Economists.
    11. Dominique Van De Walle & Dorothyjean Cratty, 2004. "Is the emerging non‐farm market economy the route out of poverty in Vietnam?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(2), pages 237-274, June.
    12. Xiao, Han & Zheng, Xinye & Xie, Lunyu, 2022. "Promoting pro-poor growth through infrastructure investment: Evidence from the Targeted Poverty Alleviation program in China," China Economic Review, Elsevier, vol. 71(C).
    13. Dufhues, Thomas & Buchenrieder, Gertrud, 2005. "Outreach of credit institutes and households' access constraints to formal credit in Northern Vietnam," Research in Development Economics and Policy (Discussion Paper Series) 8535, Universitaet Hohenheim, Department of Agricultural Economics and Social Sciences in the Tropics and Subtropics.
    14. van de Walle, Dominique & Gunewardena, Dileni, 2001. "Sources of ethnic inequality in Viet Nam," Journal of Development Economics, Elsevier, vol. 65(1), pages 177-207, June.
    15. William Easterly, 2001. "The Effect of IMF and World Bank Programmes on Poverty," WIDER Working Paper Series DP2001-102, World Institute for Development Economic Research (UNU-WIDER).
    16. Maximiliane SIEVERT & Jorg PETERS, 2017. "The Impact of Rural Electrification Challenges and Ways Forward," Working Paper 2f9349f5-6cb3-424d-9bc2-a, Agence française de développement.
    17. Liu, Amy Y.C., 2008. "Changes in urban inequality in Vietnam: 1992-1998," Economic Systems, Elsevier, vol. 32(4), pages 410-425, December.
    18. Leandro Siqueira Carvalho, 2010. "Poverty and Time Preference," Working Papers 759, RAND Corporation.
    19. Fan, Shenggen & Jitsuchon, Somchai & Methakunnavut, Nuntaporn, 2004. "The importance of public investment for reducing rural poverty in middle-income countries: the case of Thailand," DSGD discussion papers 7, International Food Policy Research Institute (IFPRI).
    20. Burney, Jennifer A. & Naylor, Rosamond L., 2012. "Smallholder Irrigation as a Poverty Alleviation Tool in Sub-Saharan Africa," World Development, Elsevier, vol. 40(1), pages 110-123.
    21. Songco, Jocelyn A., 2002. "Do rural infrastructure investments benefit the poor? Evaluating linkages : a global view, a focus on Vietnam," Policy Research Working Paper Series 2796, The World Bank.
    22. Alberto Chong & Jesko Hentschel & Jaime Saavedra, 2007. "Bundling of Basic Public Services and Household Welfare in Developing Countries: An Empirical Exploration for the Case of Peru," Oxford Development Studies, Taylor & Francis Journals, vol. 35(3), pages 329-346.
    23. Fox, Louise & Pimhidzai, Obert, 2011. "Is informality welfare-enhancing structural transformation ? evidence from Uganda," Policy Research Working Paper Series 5866, The World Bank.
    24. Lucia Mangiavacchi & Paolo Verme, 2009. "Evaluating Pro-poor Transfers When Targeting is Weak: The Albanian Ndihma Ekonomike Program Revisited," Working Papers - Economics wp2009_08.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.

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