UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS VIETNAM- NETHERLANDS PROGRAMME FOR M.A. IN DEVELOPMENT ECONOMICS DETERMINANTS OF HOUSEHOLDS' INCOME IN PLANNED AREAS: A CASE OF MY PHUOC DOWNTOWN- BEN CAT DISTRICT- BINH DUONG A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By THAI THANH PHONG , so G1i0ovc ·- 1 TRIJONG HQC KINH TE TP.HCM I TIIV YVII1.r\T I ) 1 1-i1 I HO CHI MINH CITY, OCTOBER 2009 UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS VIETNAM- NETHERLANDS PROGRAMME FOR M.A. IN DEVELOPMENT ECONOMICS DETERMINANTS OF HOUSEHOLDS' INCOME IN PLANNED AREAS: A CASE OF MY PHUOC DOWNTOWN- BEN CAT DISTRICT- BINH DUONG A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS Academic Supervisor: DR. HA THUC VIEN Student: THAI THANH PHONG HO CHI MINH CITY, OCTOBER 2009 Acknowledgements In the first of all, my heartfelt thank goes to my supervisor, Dr. Ha Thuc Vien. His comments and suggestions on my term paper for Rural Development course helped me to form my research topic. During the course of my thesis research and writing, I have received numerously his kind supervision, guidance, useful comments and encouragements. My deepest thanks also go to Associate Professor Dr. Nguyen Trong Hoai, Co- Director of Vietnam - The Netherlands Programme for M.A. in Development Economics, who has always given me his encouragements and kindly during the course of my study and thesis research. My thanks also go to my kindly and enthusiastic classmate, Mr Nguyen Ngoc Danh, who is always ready to instruct me while I am processing and analyzing to my data with STAT A 9 .1. My thesis was made possible with co-operation and supports of local people in of My Phuoc downtown who kindly provided me useful information and ideas related to my research. I am grateful to My Phuoc downtown and Ben Cat district People's Committee, especially to Mrs. Thuy who gave me many information which included important data; Mr Tuan in ward 2, Mr Chau in Ward 3, Ms Hoa in ward 4 who took and introduced me with local people during time conducting my fieldwork. I would also like to present many thanks to my cousin and my friends, who helped me to approach project documents of My Phuoc IPs. I am grateful to my manager in Binh Duong Telecommunication, Mrs Huong, who created advantage condition in job let I had time to survey during two month. My heartfelt gratitude also goes to my wife, Ha and two girls, Nha and Thanh, who are my love and motivation during the studying time. Determinants of Households' Income in Planned Areas DECLARATION I declare that "Determinants of Households' Income in Planned Areas: A Case of My Phuoc Downtown - Ben Cat District - Binh Duong Province" is my own work, that it has not been submitted to any degree or examination at any other universities, and that all the sources used or quoted are indicated and acknowledged by complete references. HCMC, October 2009 THAI THANH PHONG MDE- Class 13 11 Determinants of Households' Income in Planned Areas Abstract This study aims to investigate the impacts of land recovery for industrial and urban development on displaced people's livelihoods those who are living in industrial and urban planed areas in Binh Duong Province through a case study of My Phuoc Downtown. A main approach of this study is based Sustainable Livelihood Framework developed by DFID (2001). A combination of qualitative and quantitative methods was employed throughout the research process, from the early stage to the data analysis stage to describe livelihood patterns of surveyed households before and after displacement and to analyze statistically factors affecting their income. More specifically, econometrics models were applied to estimate the role of livelihood assets on livelihood outcome of displaced households. Quantitatively, linear regression model was applied to estimate the impacts of household livelihood assets, compensation (both in kind and in cash) on household income. The estimation results show that there is positive impact of livelihood assets on livelihood outcome (total household income) before the displacement at a 1% significant level (wage and saving) and at a 5% significant level (farmland and residential land). After resettlement, estimating results of simultaneous equations model with three-stage least-squares estimation method inform that compensated money, compensated residential land and accessed credit volume has positively determined the total investment for livelihood rehabilitation at 1% significant level. In addition, a number of resettled housing land transfer times are positive effect (significantly at a 5% level) to household's total livelihood investment. Together with investment for livelihood rehabilitation, total expenditure on children education after resettlement also has positive impact with total household's income after resettlement at a 5% significant level. Proxy indicators of livelihood assets are positively and significantly related with total income after resettlement such as: education of household head (at a 5% level), a number of working member in household (at a 1% level); a number of cell phone in a household (at a 1% level); a number of meeting time per year (at a 1% level) and financial savings and livestock value before the displacement (at a 5% level). Moreover, the study found that, most displaced households do not receive any priority in vocation trainings, credit for alternative livelihood development and tax MDE- Class 13 lll Determinants of Households' Income in Planned Areas exemplification programs from local government and urban development project investors although displaced people are often promised by authorities and investors at the beginning ofthe project initiation. Keywords: Livelihood, industrialization, land recovery, compensation, resettlement. MDE- Class 13 IV Determinants of Households' Income in Planned Areas Contents Acknowledgements i Abstract iii Contents v List of Tables vii List of Figures viii Chapter 1 1 1. Introduction 1 1.1. Problem statement 1 1.2. Objectives ofthe study 3 1.3. Research questions 4 1.4. Outline of the thesis 4 Chapter II 6 2. Literature Review 6 2.1 Definitions and terminologies 6 2.1.1 Land ownership 6 2.1.2 Land allocation 6 2.1.3 Land use rights 6 2.1.4 Land price 7 2.1.5 Land recovery and resettlement 7 2.1.6 Livelihoods 8 2.2 Empirical studies of land recovery, resettlement and its impacts on displaced farm households' livelihoods 8 Chapter III 12 3. Research Methodology 12 3 .1. Analytical framework of the study 12 3.2. Econometric framework ofthe study 14 3.3. Variables definition 16 3 .4. Data collection and analysis 18 3.3 .1 Selection of study site 18 3.3 .2 Unit of analysis 19 3.3 .3 Data sources and collection techniques 19 3.3.4 Data· analysis 20 Chapter IV 22 4. Description of Study Area 22 MDE- Class 13 v Determinants of Households' Income in Planned Areas 4.1 Industrialization progress ofBinh Duong province 22 4.2 Background of study site (My Phuoc downtown) 22 4.3 Regulations of Vietnam on land recovery and resettlement 24 4.4 Regulations of land recovery and resettlement of My Phuoc Industrial Park project 25 4.5 The implementation of policies of land recovery and resettlement in My Phuoc downtown 27 Chapter V 32 5. Displaced Households' Livelihoods 32 5.1 Household's livelihood patterns 32 5.1.1 Households' livelihood patterns before land recovery (Year 2000) 32 5.1.2 Patterns of household's livelihood right after resettlement 33 5.1.3 Current patterns of households' livelihood 37 5.2 Compensation and compensation using .41 5.2.1 Compensation 41 5.2.2 Compensation using 44 5.3 Livelihood Assets 51 5.3.1 Natural Capital 51 5.3.2 Physical capital 52 5.3.3 Financial Capital 54 5.3.4 Social Capital 56 5.3.5 Human capital 58 5.4 Households' expenses 61 5.5 Household's income 61 5.5.1 Income sources and income calculation method 61 5.5.2 Trends in household income 63 5.6 Results ofthe econometric analysis 67 5.6.1 Determinants of households' income before the planning 67 5.6.2 Determinants of households' income after resettlement 68 Chapter VI 73 6. Conclusions 73 6.1 Conclusion and recommendations 73 6.2 Research limitation 75 References 76 Appendices 82 Appendix A: Variables definition 82 Appendix B: Aggregated income model before the planning (Year 2000) 83 Appendix C: Aggregated Income Model after the Resettlement (Year 2008) 83 Appendix D: Questionnaires 85 MDE- Class 13 Vl Determinants of Households' Income in Planned Areas List of Tables Table 3-1 : Variable definition 17 Table 4-1: Summary of compensation following regulations 25 Table 4-2: Summary of compensation in My Phuoc Industrial Park 27 Table 4-3: Policies of compensation and resettlement 31 Table 5-l: Patterns of Livelihood before the Planning 32 Table 5-2: Patterns oflivelihood activity combination before the planning 33 Table 5-3: Patterns of household's livelihood activities after land recovery and resettlement 36 Table 5-4: Number kinds oflivelihood after displacement and resettlement 37 Table 5-5: Current patterns of households' livelihoods 39 Table 5-6: Current patterns of household livelihood activity combination 40 Table 5-7: Vary in cash compensation among households .42 Table 5-8: Classification of household's cash compensation 42 Table 5-9: Vary in household's land compensation 43 Table 5-l 0: Classification of household's land compensation by area .43 Table 5-11: Cash compensation expenses 44 Table 5-12: Detail of property investment from cash compensation .45 Table 5-13: Household's investment in education 46 Table 5-14: Using compensated/resettled residential land 47 Table 5-15: A number oftimes to transfer compensated land .47 Table 5-16: Reasons of sale compensated/resettled residentialland 48 Table 5-17: Other income sources of displaced household 48 Table 5-18: Balance of compensation expenses 49 Table 5-19: Detail of household finance deficit 49 Table 5-20: Finance sources to cover deficit 49 Table 5-21: Surplus of compensation after expenses 50 Table 5-22: Land area of observed households before the planning and at the present 51 Table 5-23: Classification of household's house types before the planning 53 Table 5-24: Public service access by households before the planning 53 Table 5-25: Price of one kilowatt of electrical power 54 Table 5-26: Types of constructed house at the present 54 Table 5-27: Area of house before the planning/at the present 54 Table 5-28: Average distance to public service systems 54 Table 5-29: Saving and livestock value of household before the planning/at the present 55 Table 5-30: Household's loan access before the planning/at the present 55 Table 5-31: Household's loan sources before the planning/at the present 55 Table 5-32: Loan using before the planning 56 Table 5-33: Loan using at the present 56 Table 5-34: Friendly level of neighbours 57 Table 5-35: Security condition level 57 Table 5-36: Social environment before the planning/at the present 57 Table 5-37: Organizations/Associations before the planning/at the present 58 Table 5-38: Member of social organizations before the planning/at the present 58 Table 5-39: Age of household head in the sample at the present 59 MDE- Class 13 Vll Determinants of Households' Income in Planned Areas Table 5-40: Classification of average age of household members at the present 59 Table 5-41: Household size 59 Table 5-42: Average education of household members at the present 59 Table 5-43: Education in observed households at the present 60 Table 5-44: Composition of household at the present 60 Table 5-45: Annual expenses of households before the planning/at the present 61 Table 5-46: Detail of annual expense before the planning/at the present 61 Table 5-47: Comparison of household annual expenses 61 Table 5-48: Income sources of surveyed households 63 Table 5-49: Annual farm-based income before the planning/after displacement/at the present 64 Table 5-50: Household aggregated income 65 Table 5-51: Trends in proportion of farm-based income 65 Table 5-52: Household's non-farm income before the planning/after resettlement /at the present 66 Table 5-53: Descriptive statistics of proxy variables before the planning 68 Table 5-54: Regression results of econometric model before the planning 68 Table 5-55: Descriptive statistics ofproxier variables after resettlement 70 Table 5-56: Regression results of econometric model after resettlement 71 List of Figures Figure 3-1: Conceptual framework for the empirical study 12 Figure 4-1: Administrative map of Ben Cat district 23 Figure 4-2: Location map of My Phuoc downtown 23 Figure 4-3: Double market (Chq Doi) 28 Figure 4-4: Silent professional school in My Phuoc IP 29 Figure 5-1: Resettled house border with the cattle cage of Uncle Pham Van Hai 34 Figure 5-2: Cattle freely on non-using resettled land 34 Figure 5-3: Recruitment information pasted on the gate of a company 35 Figure 5-4: Villa of Mr. Pham Van Tru with motorbike mend panel in the front 38 Figure 5-5: Internet Shop of a displaced household 38 Figure 5-6: Chain of rooms for lease of a resettled household 40 Figure 5-7: Old lady Nguyen Thi An keeping a herd ofcattle .41 Figure 5-8: Chart of compensation expenses 45 Figure 5-9: New house of the most successful displaced household 50 Figure 5-10: Average education of household members at the present 60 Figure 5-11: Trends in household income sources 64 Figure 5-12: Trends in average annual income ofhousehold 67 MDE- Class 13 V111 [...]... model can lead to biased and inconsistent parameter estimators (Pindyck and Rubinfield, 1991: 228) MDE- Class 13 15 Determinants of Households' Income in Planned Areas 3.3 Variables definition - Dependent variables: Total income of household was selected as proxies indicator of livelihood outcome Dependent variables in the study comprise of: total income of household before the planning, total income of. .. living of households, and answer research questions above - Regarding data analysis, descriptive statistics, analysis and explanation of impacts of the industrial and urban planning on the changing of the livelihood assets and outcomes of resettled households in planned areas were adopted Some tools such as: explanatory; combining text discussion with tables summarizing the observation; case study profile... of human capital These variables have a long tradition as proxies for human capital and have often proven their correlation with household income in empirical studies (Narayan and Princhett 1997, Wolz et al2004) • Proxy variables of natural capital: Farm size, the most valuable asset of farm households, was collected as representations of natural capital • Proxy variables of physical capital in this... several factors which were generated after resettlements MDE- Class 13 16 Determinants of Households' Income in Planned Areas independent variables, such as: total of investment for education, number times of resettled land transfer Table 3-1 : Variable definition DEFINITION VARIABLE Dependent variables inc_bp Total income ofhousehold before the planning (year 2000) inc_p Total income of household after... form: Yo= f(LAo) MDE- Class 13 14 Determinants of Households' Income in Planned Areas Where, Y0 represents the total income of observed household before the planning (year 2000) LAo are proxy variables of five livelihood assets in year 2000: human capital, natural capital, physical capital, financial capital, social capital After displacement, livelihood assets of displaced households changed completely... the life and livelihood of farm households in planned areas Empirical evidence suggests that one hectare of farmland converted into non-agricultural land leads ten farmers to be jobless As a MDE- Class 13 1 Determinants of Households' Income in Planned Areas consequence, millions of those whose land recovered for industrial, urban and infrastructure development have become no career since adopting economic... industrialization progress of Binh Duong province, particularly in My Phuoc downtown, leading to land recovery and resettlement of households in planned areas The chapter also mentions about regulations of Vietnam on land recovery and resettlement, policies of land recovery and resettlement of My Phuoc Industrial Park project and its implementation 4.1 Industrialization progress of Binh Duong province Binh Duong. .. (year 2008) investment Total investment for livelihood rehabilitation Independent varia hies * Proxy variables of human capital: edu hhh Education of household head workingmbr_p Number of working members in household after resettlement working_edu Average education of working members * Proxy variables of natural capital: frmland_bp Total areas offarm land before the planning * Indicators of physical... year in 2007 (WEO 2008) The industrialization and urbanization process in line with economic reforms has been taken place throughout the country As a consequence, a large area of farmland is converted into non-agricultural land for expansion of urban areas, industrial zones, and infrastructure Thanh· (2007) asserts that more than 73,000 hectares of farmland was annually converted for expansion of industrial... comprises capabilities, and mean ofliving, including food, income and assets" (Chambers and Conway 1991) Ellis (2000) suggests a more elaborate definition, that is, "A livelihood comprises the assets (natural, physical, human, financial, and social capital), activities, and the access to these (mediated by institutions and social capital) that together determine the living gained by an individual or households" . Planned Areas DECLARATION I declare that " ;Determinants of Households& apos; Income in Planned Areas: A Case of My Phuoc Downtown - Ben Cat District - Binh Duong Province". ECONOMICS DETERMINANTS OF HOUSEHOLDS& apos; INCOME IN PLANNED AREAS: A CASE OF MY PHUOC DOWNTOWN- BEN CAT DISTRICT- BINH DUONG A thesis submitted in partial fulfilment of the requirements. ECONOMICS DETERMINANTS OF HOUSEHOLDS& apos; INCOME IN PLANNED AREAS: A CASE OF MY PHUOC DOWNTOWN- BEN CAT DISTRICT- BINH DUONG A thesis submitted in partial fulfilment of the requirements