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

Firm 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 ligh...

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Bibliographic Details
Published inReview of development economics Vol. 28; no. 3; pp. 1231 - 1266
Main Authors Thanh, Pham Tien, Saito, Katsuhiro
Format Journal Article
LanguageEnglish
Published Oxford Blackwell Publishing Ltd 01.08.2024
Subjects
Clustering
developing country
Economic development
Emigration
firm cluster
Households
Immigrants
Income
Local economic development
Migration
Poverty
Propensity
Rural areas
Rural communities
Rural development
welfare
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Summary:Firm 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.
ISSN:1363-6669
1467-9361
DOI:10.1111/rode.13098