Did Program Support for the Poorest Areas Work? Evidence from Rural Viet Nam Hai-Anh H. DangKlaus DeiningerCuong Viet Nguyen Development Data Group &Development Research GroupJanuary 2025 Policy Research Working Paper11029 Abstract This paper investigates the impact of a large-scale povertyalleviation program targeted at the 62 poorest districts inViet Nam. The analysis of multiple data sets spanning thepast 20 years uses a regression discontinuity design withdistrict fixed effects. The findings do not reveal significantprogram effects on household welfare (as measured by percapita income and poverty) or local economic development(as measured by nighttime light intensity and establishmentof new firms). However, the findings show that the programfacilitates a shift from farm to nonfarm employment and significantly increases the share of nonfarm income for ruralhouseholds. A possible explanation for the positive effectson nonfarm employment is the improved access to creditthat the program provides to participating households. Thefindings also show that the program increases householdaccess to electricity, public transfers, educational subsidiesfor students residing in the program districts, and healthcare utilization, possibly through improving the availabilityof commune health care centers. The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about developmentissues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry thenames of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely thoseof the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank andits affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. Did Program Support for the Poorest Areas Work?Evidence from Rural Viet Nam Hai-Anh H. Dang, Klaus Deininger, and Cuong Viet Nguyen* JEL: C15, D31, I31, O10, O57 Key words: poverty, targeting, household surveys, Viet Nam 1. IntroductionReducing poverty is the first goal of the 17 Sustainable Development Goals (SDGs) in the United Nations' 2030 Agenda for Sustainable Development. Yet, due to limited assets andcredit constraints, poor households usually face challenges in investing in human capital andproductive activities, leading to these households being captured in a poverty trap (Balboniet al., 2022). Consistent with earlier observations that the geographic structure of livingstandards can be reasonably stable over time (Ravallion and Wondon, 1999; Jalan andRavallion, 2002), recent studies offer further evidence that persistent poverty is more likelyto be concentrated in remote rural regions in many countries (Beegleet al., 2011; Kraay andMcKenzie, 2014; Hallegatteet al., 2016; Pritchett and Hani, 2020; McBrideet al., 2022).Consequently, a common approach to poverty reduction involves implementing large-scalepoverty alleviation programs that target disadvantaged, remote areas (OECD, 2009; WorldBank, 2009).1 We investigate the effects of a large-scale poverty alleviation program on householdwelfare in Viet Nam. Despite significant progress with poverty reduction, Viet Nam stillfaces substantial disparities in poverty across different ethnic groups and geographic regions(Dang, 2012; Lanjouwet al., 2017; World Bank, 2022). Recognizing the geographicaldimension of poverty, since 2009 the Vietnamese government has initiated a major povertyreduction program—the 30A Program—that focuses on the country’s 62 poorest districts(Government of Vietnam, 2008).2This program is designed to improve income and livingstandards within the program districts by fostering agricultural productivity and generatingnonfarm employment opportunities for the local population. The 30A Program encompasses fourprimary components:support for production and employment,infrastructureinvestment, policies concerning personnel in poor districts, and educational assistance forindividuals and public personnel. One significant form of support for households is theprogram provision of microcredit and cash subsidies, which aim to enhance poor households’agricultural productivity and facilitate their transition to non-farm employment. Overall, our analysis reveals no significant impact of the 30A Program on householdincome or poverty. We also do not find significant program effects on local economicdevelopment, as measured by commune-level nighttime light data, establishment of newfirms or migration inflows and outflows. However, we find positive program impact onhousehold transitions from farm self-employment to nonfarm self-employment, leading toincreased nonfarm income and decreased farm income. The results are robust to variousfalsification tests, RDD bandwidths, model spe