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A THESIS PRESENTED BY HA CHI HAI
Website: http://www.docs.vn Email : lienhe@docs.vn Tel : 0918.775.368 NATIONAL ECONOMICS UNIVERSITY HA NOI INSTITUTE OF SOCIAL STUDIES THE HAGUE DETERMINANTS OF POVERTY REDUCTION POTENTIAL OF LAND IN RURAL VIETNAM A THESIS PRESENTED BY HA CHI HAI In Partial Fulfillment of the Requirements for Obtaining the Degree of MASTER OF ARTS IN ECONOMICS OF DEVELOPMENT SUPERVISOR Assoc.Prof Dr NGUYEN QUANG DONG HANOI - 2007 ACKNOWLEDGEMENT In completing my thesis, I have been received considerable and kind support from many people, to whom I would like to give my special thanks First of all, I would like to express my special thanks to Assoc Prof Dr Nguyen Quang Dong, for his valuable time reading my drafts and giving me helpful guidance, support and suggestions I am grateful to Prof Dr Sc Vu Thieu for his lectures on research methodology and econometric I also would like to thank all the teachers and the staff in the Vietnam – Netherlands Master Project who have given my classmates and me their enthusiasm, kindness and effective help during our course Finally, I am deeply indebted to my family, MDE classmates for their spiritual encouragement throughout the preparation and development of this thesis Without their heartfelt love and support, the thesis would have been made impossible HA CHI HAI November 2007 i ABSTRACT This thesis examines the role of land as an instrument of poverty reduction, combine with conditions under which access to land in Vietnam rural The thesis employs parametric methods and data from Vietnam Living Standard Survey 2002 The results show that marginal welfare value of land is quite high An increase of hectare will increase annually income by 2,700,000 VND a year, but there is a wide range of difference in return to land among regions Education is an important factor contributes to household welfare, a marginal increase in the household head’s education level raises welfare by 2,498 thousand VND/year if the head finished primary level and reach up to 14,929 thousands if the heads have education attainment from vocational program, colleague and university or higher In addition, the marginal welfare value of land depend importantly other conditions under which land is used by households such as household and local characteristics ii TABLE OF CONTENTS ACKNOWLEDGEMENT i ABSTACT ii LIST OF TABLES iii LIST OF ABBRIVIATIONS v CHAPTER I INTRODUCTION 1.1 Research topic 1.2 Research objectives, scope and focus of the study 1.3 Research questions 1.4 Methodology 1.5 Data 1.6 Structure of the thesis CHAPTER II METHODOLOGICAL FRAMEWORK I Theoretical framework II Econometric specification of the welfare equation III Literature review CHAPTER III OVERVIEW OF LAND ALLOCATION IN VIETNAM’ AGRARIAN TRANSITION AND POVERTY 10 I OVERVIEW OF LAND ALLOCATION IN VIETNAM’ AGRARIAN TRANSITION 10 1.1 Land reform in Vietnam 10 1.2 The process of land allocation 14 1.3 Land use in Vietnam 15 II POVERTY IN VIETNAM 17 2.1 Overall Poverty in Vietnam 17 2.2 Dimensions of poverty in Vietnam 17 2.3 Summary of characteristics of poverty in Vietnam 20 CHAPTER IV iii ESTIMATION RESULTS OF HOUSEHOLD WELFARE 22 I DATA 22 II DESCRIPTION OF VARIABLES 23 Dependent variable 23 Explanatory variables III.ESTIMATION RESULTS: The household welfare generating potential of land SUMMARY OF FINDINGS 23 25 29 CHAPTER V CONCLUSION AND POLICY IMPLICATIONS 30 I CONCLUSION 30 II POLICY IMPLICATIONS 30 III SUGGESTION FOR FURTHER STUDY 31 REFERENCES 32 APPENDICES 35 iv LIST OF TABLES Table - Major annual crops grown in Vietnam, 1995-2000 16 Table 2: Indicators of poverty in Vietnam 1990-2002 17 Table 3: Spatial dimensions of poverty and inequality in Vietnam 18 Table 4: Ethnic and gender dimensions of poverty in Vietnam 19 Table 5: Socio-characteristics of Vietnam’s poverty profile 20 Table 6: Number of household by region 22 Table - Estimation of the welfare household index 27 v LIST OF ABBREVIATIONS CH Central Highland CPI Consumers’ Price Index GSO General Statistics Office of Vietnam MKD Mekong Delta NCC North Central Coast NE North East NW North West OLS Ordinary Least Square RRD Red River Delta SCC South Central Coast SE State-Owned Enterprises VLSS 2002 Vietnam Living Standards Survey in 2002 VND Vietnamese Dong WB World Bank vi CHAPTER I INTRODUCTION 1.1 Research topic The role of land in economic theory is extensively documented Originally, land used by agriculture was the main motivation for an economic treatment of land Prominent effort of classical economist was to established relation between land, labor and capital and its contribution to economic growth Later, land use did not occupy an important position in neoclassical core economic theory, they considered it as a production factor of relatively little importance Land as the principal source of wealth in classical economics lost its central role in neoclassical economics (Klaus; Jeroen, 2002) In reality, land in agricultural production still plays a key role both in term of household wealth and mean of poverty reduction Access to land has for many years advocated as one of the potentially most effective approaches to rural poverty alleviation (Warriner, 1969; Thiesenheusen, 1989; Bingswanger et al., 1995) Therefore land reforms in developing countries aimed to give the poor opportunity to help them go out of poverty status It was not far away from favoring low income people, pro-poor policy in Vietnam has extensively and dramatically performed land reform over renovation process (Doi Moi) since 1986 Vietnam started to transform its rural sector from collectivized agricultural production to a system based on households’ initiative, a move that culminated in the passage of the 1988 Land Law A new law was enacted in July 1993 to deal with factors such as threats of administrative reallocation, short duration of use rights, lack of transferability and the inability to use land as collateral Studies have shown that this led to significant increases in overall rural productivity, although pre-existing differences between North and South were not eliminated (Pingali and Xuan 1992, Tran 1998), other study suggest that land allocation responded positively but slowly to the inefficiencies of the administrative allocation (Ravallion, M; Walle, D.V.D) We see that there is, however, a remarkable absence of solid empirical evidence measuring the potential of land in reducing poverty in Vietnam, particularly carefully taking into account the specific conditions under which land is used by beneficiaries, when we well know that these conditions are key determinants of success or failure Aim to analyze further these effective factors basically and systemically, the topic “Determinants of poverty reduction potential of land in Vietnam rural” will be employed for my thesis 1.2 Research objectives, scope and focus of the study This thesis will examine determinants of poverty reduction potential of land in Vietnam rural from Vietnam Living Standards Survey in 2002 (VLSS 2002) In the thesis, I will focus on exploring the relationship between income and agricultural land endowment of household where household mainly generate income from agricultural land and taking into account the specific conditions under which land is used by beneficiaries The study focuses on four main works Firstly, it is to introduce a general framework Secondly, it is to provide a overview of agricultural land and poverty in Vietnam Thirdly, it is to estimate household welfare equation, which include without and with correcting selectivity bias, Finally, the study provides policy implications to agricultural land 1.3 Research questions The thesis is to address main question: Which determinants cause heterogeneity in marginal returns to land for households endowed with agricultural land in Vietnam? Sub-questions include: Does marginal return to land endowed by household increase by area of agricututal land? Are there any differences in welfare of household by regions? Are there any differences in welfare of household by household characteristics, by which ways? Are there any differences in welfare of household by education? 1.4 Methodology The study reviews theoretical frameworks and relevant researches of the research topic The research questions will be addressed by the quantitative method Based on theoretical framework, household welfare equation is estimated, including selectivity correction In addition, statistical and descriptive analyses are used as well 1.5 Data This study is based on the data from the Vietnam Living Standards Survey 2002 (VLSS 2002) which conducted by World Bank (WB) and the General Statistic Office (GSO) of Vietnam The survey provides detailed information about employment, income, education, and demographic characteristics of household members 1.6 Structure of the thesis The thesis is divided into five chapters: Chapter 1: Introduction Chapter 2: Introduces theoretical considerations, methodological framework, and a brief of relevant literatures on returns to agricultural land Chapter 3: Provides an overview agricultural land and poverty in Vietnam Chapter 4: Presents estimation results of household welfare equations Chapter 5: Summarizes main findings and provides policy implications based on the results ... scope and focus of the study This thesis will examine determinants of poverty reduction potential of land in Vietnam rural from Vietnam Living Standards Survey in 2002 (VLSS 2002) In the thesis,... 14 1.3 Land use in Vietnam 15 II POVERTY IN VIETNAM 17 2.1 Overall Poverty in Vietnam 17 2.2 Dimensions of poverty in Vietnam 17 2.3 Summary of characteristics of poverty in Vietnam 20 CHAPTER... key determinants of success or failure Aim to analyze further these effective factors basically and systemically, the topic ? ?Determinants of poverty reduction potential of land in Vietnam rural? ??