Who benefits from better rural roads in Vietnam and why?

Nguyen, a 36-year-old female head of household in Luong Song Commune, Lao Cai Province, Vietnam is not investing in higher value crops, even though they now can be cultivated and marketed thanks to better connectivity. She explains that the acacia trees, recently planted by many local farmers, must grow for several years before they can be harvested and sold to paper mills for pulp. She cannot afford to do that.

“Rich people have capital, so they can wait. We [are a household with] an average living standard… We cannot make long-term and large-scale agricultural investments like the rich,” said Nguyen.

While it is often assumed that transportation is gender-neutral and benefits all equally, Nguyen’s situation shows that this is not always the case. Although there is extensive evidence that better rural roads can expand economic opportunities, improve health and education outcomes, and ultimately, decrease poverty, we know much less about who actually reaps these benefits. 

An impact evaluation of the World Bank-financed Third Rural Transport Project in Vietnam asks who benefits from better roads and explores why some groups were left behind despite road improvements. This is one of the large-scale rural transport projects in Vietnam which rehabilitated 3,100 km of rural roads and maintained over 19,000 km of rural roads spread across 33 provinces in Northern and Central Vietnam between 2008 and 2015. Researchers combined quantitative analysis of national survey data for 509 households in the project area with in-depth interviews and focus group discussions in three provinces.

The study revealed that the economic gains are sharply divided along gender lines. Road improvements increased agricultural trade for all of them; but the magnitude of the uptick was substantially higher among male-headed households—more than twice as much. Meanwhile, crop production increased only among male-headed households.

Why is that? A number of factors come into play. First, female-headed households are constrained in terms of labor as most of them are headed by widows or single women. Having one fewer working-age adult makes it difficult to increase crop production, considering labor is a key production input.

Second, the missing income from having one fewer laborer may result in financial barriers to production expansion. A family can increase the scale of production and/or revenue by either hiring machinery for ploughing and moving goods around – or switching from rice to higher-value trees such as acacia, cinnamon or orange. However, these strategies require high upfront payment, and such investment might take months and even years to come into fruition. More often than not, female-headed households do not have the necessary money or time.  

These findings suggest that upgrading roads is important but may not be enough for improving rural livelihoods for all. In order for both genders to take advantage of newly created economic opportunities, there is a need for complementary programs that enable people to save and borrow money as well as develop basic business skills . A project funded by the Asian Development Bank to prepare local women for new income opportunities with the forthcoming road construction in Dong Thap Province in southern Vietnam shows this approach works. Women who received business development training support saw a 33-percent increase in average monthly income, while those who were helped to find a job more than doubled their earnings.

In principle, combining transport investments with complementary development programs will create better synergy than if they are run separately.  Development interventions ensure that the benefits of good roads reach more people, particularly vulnerable groups. Meanwhile, good roads create the environment necessary for these interventions to succeed.

In practice, the greatest challenge lies at coordination. Transport investment projects and financial inclusion or entrepreneurship training programs are typically managed by different authorities who lack the scope or incentives to coordinate the rollout of these programs. This is where institutions like the World Bank can step in by providing incentives for – and facilitating interagency coordination through – our large-scale infrastructure projects commonly supported by the World Bank in partner countries.

Key lessons learned

Given the large scale of spending on transport, a crucial development sector, it is important to ensure an equitable distribution of the benefits of transport projects,  starting in three ways:

• Learn who does or does not benefit from road improvements, and why: Identifying households that cannot take advantage of the benefits of better roads, and the constraints they face should be incorporated in project design.

• Identify complementary programs that can tackle the additional constraints faced by vulnerable households: Facilitating access to credit and providing skills training can help address these constraints.

• Coordinate road improvement programs with complementary interventions: Development institutions such as the World Bank can facilitate interagency coordination.

For more details on the impact evaluation of the Third Rural Transport Project, see the non-technical report and the full technical report. This work is conducted by The East Asia and Pacific Gender Innovation Lab (EAPGIL) with the support from the Umbrella Facility for Gender Equality in partnership with the Australian Department of Foreign Affairs and Trade.