Industrial Development, Poverty Reduction, and Inequality: A Robustness Test Using Nighttime Lights in Vietnam

ABSTRACT This paper examines the interplay between sectoral growth compositions, initial inequality, and poverty reduction in Vietnam during the 2000s, utilizing disaggregated provincial‐level data. The analysis focuses on the differential impacts of industrial and agricultural sector growth on poverty alleviation while also assessing the moderating role of initial inequality. Employing robust econometric techniques, including nighttime lights as a proxy for industrial outputs and coefficient stability tests, we find that industrial sector growth is a significant driver of poverty reduction, whereas agricultural sector growth exhibits no consistent effect. Furthermore, initial inequality does not demonstrate a stable statistical relationship with poverty reduction. These results underscore the importance of industrial development as a pathway to poverty alleviation and provide actionable insights for policymakers in developing economies undergoing structural transformation.