This paper examines how initial inequality and poverty rate are related to subsequent
economic growth in the provincial level of Vietnam. The results show a robust negative
relationship between initial poverty rate and subsequent economic growth. However, there
is no link between initial inequality and subsequent economic growth. The results also
show that lower inequality leads to lower poverty rate and poverty reduction could help to
reduce inequality. Other determinants of inequality and poverty reduction include human
capital, investment, GDP growth rate and trade openness. The main policy implication that
emerges from this paper is that concentrating on poverty elimination will help us to build a
more equitable society without sacrificing economic growth.