People‘s Support to the Doi Moi in Vietnam

Matteo Migheli(University of Torino and CeRP)

Torino, March 13 2015

Campus Luigi Einaudi Lungo Dora Siena 100/A, 10153 Torino, Italy www.est.unito.it

Motivation

• Vietnam is an interesting natural case of double transition from a market to a planned economy and the viceversa

• Actually the first transition has never been completely accomplished in the South

• At the end of the Seventies the Vietnamese Government started a process of economic and social reforms (the Doi Moi) that gained momentum since the mid Eighties

• However, reforms, also in non-democratic countries, need the support of the population (Williamson, 1994)

Matteo MIGHELIAsian emerging economies in the post crisis era

Economic Doi Moi

• The Doi Moi has been involving many aspects of the social life in Vietnam

• Here I focus on the economic aspects only • In spite of the long time elapsed since the beginning of the process,

only some economic sectors have been liberalised so far (rice)• The process has entailed large re-distributions of land, with non-

market criteria• BUT: in the South the land had never been fully collectivised

Matteo MIGHELIAsian emerging economies in the post crisis era

Economic Doi Moi

• Boosted private entrepreneurship in the industrial sector• Abolished flat wages• Failed in privatising agriculture in the North (re-institutions of co-

operatives in 1998 after abolition in 1986)• Increased the urban-rural dichotomy

Matteo MIGHELIAsian emerging economies in the post crisis era

Aims

• Using micro-data from the World Values Survey this work tries to assess:

• Whether people in different jobs are more or less supportive of the process of renovation, since it abolished

• Whether an urban-rural divide exists with respect to this support• Whether there are differences between the North and the South

Matteo MIGHELIAsian emerging economies in the post crisis era

Data

• Three waves of the WVS• Repeated cross-sections (i.e. not panel)• Data are collected at provincial level

• Important: the current administrative division fully reproduces the division in the two pre-1975 countries

• Cleaned data: 2,495 households• I analyse the answers to five questions, which capture the people’s

preferences over as many aspects of a market economy

Matteo MIGHELIAsian emerging economies in the post crisis era

Questions

• Now I'd like you to tell me your views on various issues. How would you place your views on this scale? 1 means you agree completely with the statement on the left; 10 means you agree completely with the statement on the right; and if your views fall somewhere in between, you can choose any number in between.

• Competition is good. It stimulates people to work hard and develop new ideas vs. Competition is harmful. It brings out the worst in people

• Private ownership of business should be increased vs. Government ownership of business should be increased

• Incomes should be made more equal vs We need larger income differences as incentives

Matteo MIGHELIAsian emerging economies in the post crisis era

Methodology

• All the dependent variables are discrete, and are therefore analysed by the means of ordered probit regressions

• Controls:• Location (province, size of town)• Type of job (unfortunately not very disaggregated)• Age, gender, marital status

Matteo MIGHELIAsian emerging economies in the post crisis era

Results

• Household income is positively related to the support to economic reforms in a market-oriented sense

• The data highlight a North-South divide, with the North more supportive of a market-oriented economy than the South

• There is some relevant effect of the job on the preferences• Agricultural workers are particularly favourable to a market-oriented economy

Matteo MIGHELIAsian emerging economies in the post crisis era

Results

ResultsTable 4. Ordered Probit regression for considering income inequality as an incentive to workers

Coefficienty=1 y=2 y=3 y=4 y=5 y=6 y=7 y=8 y=9

Male 0.118 -0.43 -0.45 -0.39 -0.66 -0.10 0.14 0.64 0.66 3.27(0.045)*** (0.17)*** (0.17)*** (0.15)*** (0.25)*** (0.05)** (0.06)** (0.24)*** (0.25)*** (1.24)***

Income 0.034 -0.12 -0.13 -0.11 -0.19 -0.03 0.04 0.18 0.19 0.94(0.015)** (0.06)** (0.06)** (0.05)** (0.09)** (0.02)* (0.02)** (0.08)** (0.09)** (0.42)**

South -0.289 1.05 1.09 0.95 1.62 0.28 -0.32 -1.53 -1.60 -8.03(0.053)*** (0.22)*** (0.23)*** (0.20)*** (0.32)*** (0.08)*** (0.09)*** (0.31)*** (0.32)*** (1.48)***

Age -0.005 0.02 0.02 0.02 0.03 4*10-3 -6*10-3 -0.03 -0.03 -0.13(0.002)*** (7*10-3)*** (7*10-3)*** (6*10-3)*** (0.01)** (2*10-3)*** (2*10-3)*** (0.01)** (0.01)** (0.05)***

Part time worker 0.141 -0.51 -0.54 -0.49 -0.88 -0.20 0.09 0.67 0.75 4.09(0.084)* (0.31)* (0.33)* (0.30)* (0.58) (0.17) (0.03)*** (0.35)** (0.43)* (2.56)*

Self-employed worker -0.170 0.62 0.63 0.53 0.83 0.06 -0.28 -1.01 -0.98 -4.47(0.057)*** (0.22)*** (0.21)*** (0.18)*** (0.25)*** (0.04) (0.13)** (0.37)*** (0.34)*** (1.42)***

Number of children 0.008 -0.03 -0.03 -0.03 -0.05 n.s. n.s. 0.04 0.05 0.22(0.015) (0.06) (0.06) (0.05) (0.09) n.s. n.s. (0.08) (0.09) (0.43)

Unemployed -0.043 0.16 0.16 0.14 0.23 0.03 -0.06 -0.24 -0.24 -1.16(0.108) (0.39) (0.40) (0.35) (0.56) (0.06) (0.16) (0.62) (0.62) (2.90)

Manager 0.148 -0.54 -0.57 -0.51 -0.93 -0.22 0.09 0.69 0.79 4.32(0.114) (0.42) (0.45) (0.41) (0.79) (0.24) (0.03)*** (0.45) (0.58) (3.51)

Professional 0.101 -0.37 -0.39 -0.35 -0.61 -0.13 0.08 0.50 0.55 2.90(0.117) (0.43) (0.46) (0.41) (0.77) (0.20) (0.05) (0.52) (0.61) (3.49)

Office worker 0.186 -0.68 -0.72 -0.65 -1.21 -0.31 0.08 0.82 0.97 5.52(0.142) (0.51) (0.56) (0.52) (1.04) (0.35) (0.07) (0.49)* (0.68) (4.50)

Foreman 0.047 -0.17 -0.18 -0.16 -0.27 -0.05 0.05 0.24 0.26 1.32(0.254) (0.93) (0.98) (0.87) (1.55) (0.34) (0.20) (1.24) (1.37) (7.30)

Skilled manual worker -0.036 0.13 0.14 -0.16 0.20 0.03 -0.05 -0.20 -0.21 -0.99(0.105) (0.38) (0.39) (0.34) (0.55) (0.07) (0.15) (0.60) (0.60) (2.82)

Semi skilled manual worker 0.032 -0.12 -0.12 -0.11 -0.18 -0.03 0.03 0.17 0.18 0.90(0.127) (0.47) (0.49) (0.43) (0.75) (0.15) (0.12) (0.65) (0.70) (3.60)

Unskilled manual worker -0.213 0.77 0.77 0.64 0.94 n.s. -0.43 -1.35 -1.25 -5.41(0.128)* (0.45)* (0.44)* (0.34)* (0.40)** n.s. (0.36) (0.92) (0.78)* (2.94)*

Armed forces -0.049 0.18 0.18 0.16 0.26 0.03 -0.07 -0.28 -0.28 -1.33(0.127) (0.47) (0.48) (0.41) (0.65) (0.06) (0.20) (0.75) (0.73) (3.40)

Farmer (land owner) -0.031 0.11 0.12 0.10 0.17 0.02 -0.04 -0.17 -0.18 -0.85(0.128) (0.47) (0.48) (0.41) (0.67) (0.08) (0.18) (0.73) (0.73) (3.45)

Agricultural worker (non land owner) -0.219 0.80 0.82 0.71 1.17 0.16 -0.29 -1.22 -1.23 5.96(0.090)** (0.33)** (0.34)** (0.29)** (0.46)*** (0.07)** (0.15)** (0.53)** (0.52)** (2.40)**

Size of town 0.029 -0.11 -0.11 -0.09 -0.16 -0.03 0.03 0.16 0.16 0.81(0.026) (0.09) (0.10) (0.08) (0.14) (0.02) (0.03) (0.14) (0.14) (0.71)

Year 2006 -0.127 0.47 0.49 0.43 0.73 0.13 -0.14 -0.67 -0.71 -3.57(0.046)*** (0.17)*** (0.18)*** (0.16)*** (0.28)*** (0.06)** (0.05)*** (0.24)*** (0.25)*** (1.31)***

Pr(y = n) 0.037 0.046 0.049 0.139 0.094 0.089 0.129 0.077 0.196

Observations 2,351Pseudo R squared 0.011

1 Percentage valuesn.s.= the value is not significant and lesser than 0.01.

Marginal effects1

Results

Conclusions

• The data reveal the existence of a North-South divide• In particular, southern Vietnamese are less supportive of a market

economy than Northern Vietnamese• This may be due to the uneven distribution of the benefits of Doi Moi

• I also detect some gender effect (with males more supportive of a M.E. than women), perhaps reflecting the usual gender differences in preferences for competition

Matteo MIGHELIAsian emerging economies in the post crisis era