Group assignment Table of contents

Abstract................................................................................................................................................2 I. General issues of poverty................................................................................................................3 1. Defining and measuring poverty..................................................................................................3 2. Causes of poverty in Vietnam and in Northwest countries..........................................................3 II. Current situation in Northwest provinces..................................................................................4 1. Overall information about Northwest provinces..........................................................................4 2. Current situation through poverty indexes...................................................................................5 III. Solutions........................................................................................................................................6 1. Sustainable economic development..............................................................................................6 2. Implementation of hunger eradication and poverty reduction programs and projects................7 3. Invest in essential infrastructure for the poor communes and areas............................................8 4. Better market access......................................................................................................................8 5. Improve productivity in agriculture and diversifying the rural economy....................................9 6. Improve access to credit..............................................................................................................10 7. Access to social welfare systems................................................................................................10 8. Promote human resources...........................................................................................................11 Conclusion.........................................................................................................................................12 References..........................................................................................................................................13

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Group assignment Abstract

For the last 15 years, innovation process of the government has achieved some considerable achievements in increasing income and lowering poverty in Vietnam. However, the number of poor people is still quite high and helping them to escape from poverty is one of the top priorities of the government. Northwest provinces are the poorest ones in Vietnam. There are many subjective and objective causes for this situation. They stem from both natural and man-made factors. To solve this problem, competent authorities have to find the exact reasons or the underlying causes of poverty in such provinces, and then find the most suitable policies to improve the situation.

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I, General issues of poverty: 1. Defining and measuring poverty: There are many ways to define poverty. But in general: Poverty is the state of having little or no money and few or no material possessions. Moreover, poverty refers to the condition of not having the means to afford basic human needs such as: clean water, nutrition, health care, education, clothing and shelter. The most common method used to define poverty is income-based. A person is considered poor if his or her income level falls below some minimum level necessary to meet basic needs. This minimum level is usually called: poverty line. AusAID (The Australian Agency for International Development) defines poverty as a level of deprivation such that a person is unable to meet minimum of well being with well being defined as:

Adequate resources for attaining the basic necessities for food, water, shelter and clothing;
Access to acceptable levels of health and education;

Accountability from state institutions and civil society;

Freedom from excessive vulnerability to adverse shocks.

In Vietnam, there are two primary definitions of poverty: one is calculated by the international community and one is applied by standards of the government. The international poverty line used in Vietnam consists of food poverty and overall poverty. The food poverty line is calculated based on a minimum consumption level of 2,100 calories per person per day, while overall poverty calculates food and non-food basic needs. 2. Causes of poverty in Vietnam and in Northwest provinces: We need to answer the question why people are poor because it is important to make an effective strategy. Knowing the causes of poverty allows identifications of relevant interventions to improve the well-being of the poor. In Vietnam, the main problems leading to poverty are: Unfavorable natural conditions Farmers lack of production resources

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Lack of pro-poor-oriented policies in irrigation-investment projects Management of water not fully responsive to farmers needs. Lack of linkages between agencies and stakeholders Lack of legitimate and clear rules.

The lack of financial poverty is obviously the main reason for poverty. The next cause is low knowledge and educational levels. Another important factor contributing to poverty in Vietnam is the lack of arable land, food shortages, poor quality land, and also a lack of tools and inputs. More seriously, we are in short of improved agricultural technologies. Last but not least, poor quality of infrastructure and limited transportation is also amongst the main factors. In particular, in Northwest provinces, the most significant underlying cause of poverty is limited educational level and knowledge. In fact, lack of formal education contributes to the high level of illiteracy and inability to speak the national language in many remote areas where there are many ethnic groups. Especially, in such provinces, lack of mass media, extension services and interaction with outside community are also a reason preventing residents from approaching knowledge and updated information. II. Current situation in Northwest provinces: 1. Overall information about Northwest provinces: Northwest provinces are mountainous areas which are in the West of Northern Vietnam. They have the same borders with Laos and China. Northwest provinces include 6 ones: Hoa Binh, Son La, Dien Bien, Lai Chau, Lao Cai, and Yen Bai. It has an area of more than 5.64 million ha with a population of over 3.5 millions of people. This area has a lot of natural resources such as: coal, precious metal, nickel or mineral water. Besides, it has strong advantages in raising cattle, thanks to large pastures and cool climate, especially cows for milk and meat in Son La. About residents, Northwest provinces of Vietnam have a variety of ethnic groups. Population density of the whole region is very low and unequal. The most crowded places are towns or farms, plantations. In contrast, in high mountainous

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areas, there are few roads, travel is difficult and only ethnic minorities live there. Such reasons result in a low population density. About the current situation of development, Northwest part is stronger in agriculture, with products such as: tea, coffee or cotton. However, industries are still weak, production is just self-sufficient. The economic structure has seen many changes, but such changes are slow and mainly in forestry and agriculture. 2. Current situation through poverty indexes: (Taken from www.gso.gov.vn) POVERTY RATES IN VIETNAM
%
1998 2002 28.9 6.6 35.6 21.5 47.9 35.7 51.8 8.2 23.4 2004 19.5 3.6 25.0 11.8 38.3 25.9 33.1 3.6 15.9 2006 16.0 3.9 20.4 8.9 32.3 22.3 28.6 3.8 10.3 2008 14.5 3.3 18.7 8.0 31.6 18.4 24.1 2.3 12.3

COUNTRY Overall poverty rate Urban or rural Urban Rural Region Red River Delta Central and Northern provinces North Central and Central Coast Central Highlands South East Mekong River Delta
(*)

37.4 9.0 44.9 30.7 64.5 42.5 52.4 7.6 36.9

The overall poverty is calculated by the average expenditure for one person per month with the poverty line of World Bank as follows: 1998: 149,000 VND; 2002: 160,000 VND; 2004: 173,000 VND; 2006: 213,000 VND; 2008: 280,000 VND. As it can be seen from the table, Northern provinces have the highest poverty rate in the whole country. Although the poverty rate has declined from 1998 to 2008, that rate is still very high. In such provinces, the poverty rate accounts for 32.6 % of the population. While in other part of the countries, the average number of this index is lower than 20%. It means that Central and Northern provinces, especially Northwest provinces are the poorest ones in Vietnam. To make it clearer, take a look at the below map and see how poor the Northwest provinces are, in comparison with other provinces in the country:

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Geographical distribution of poverty According to the map, Northwest provinces account for the largest percentage of poverty in Vietnam. It takes more than 60% of poverty rate in the whole country. It is a sad fact; however, lets look into a deeper analysis about why people in this area are poor and how the government is trying to improve this situation. III. Solutions: 1. Sustainable economic development: One of the key solutions to poverty issues is making effective and sustainable economic growth. It is clear that poverty is a drawback of high growth rate of economy, with which social issues are not paid careful attentions, leading to income inequality and poverty throughout the country. To be more specific, an economy is considered to have sustainable development when it attains high and stable GDP growth rate as well as GDP/capita, a reasonable economic structure, ensuring the equality and

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efficiency in allocating resources amongst areas in the nation. When overall income increases, government will have more funds to implement poverty reduction policies or programs. Moreover, a stable economy may reduce the negative impacts of internal and external economic shocks from which the poor have to suffer the most serious influence. This target can be achieved by effective fiscal and monetary policies in order to curb inflation, maintain interest rate in safe band. 2. Implementation of hunger eradication and poverty reduction programs and projects: The main reason for poverty in Northern provinces in Viet Nam is the lack of direction as well as facilities and technologies to develop production. Therefore, it is urgent to support the poor in terms of capital, means of production and technologies. In other words, government should take necessary actions to give those unlucky citizens a fishing rode and instruct people how to apply new methods and modern technologies in agriculture production. These supports are to be launched in form of national or regional projects and programs. Over the past few years, Viet Nam has been carrying many programs, especially the project of poverty reduction in the North of Viet Nam and achieved certain successes. However, these projects should increase in scale and effectiveness. The matter is that different approaches or methods to combat the poverty problem are to be applied to different provinces, which have variety of natural and human conditions in order to shift agriculture structure gradually, adopt advanced technology and eliminate poverty step by step. This requires careful researches and broad vision of government on the deciding strategies for the projects. People in Northern provinces mainly produce agriculture products with low productivity. So projects are assumed to introduce new model of production with modern technology application to the farmers which promote the labor productivity considerably. Yet, these are not enough to enable higher income of the poor unless they can sell the products at a sufficient price. To get optimal outcomes in its measures, government needs to take into consideration many perspectives in order to help the poor to find out the way to converse the situation. For example, when inducing a new kind of plant or animal in a locality, people are supposed to be sustained not only inputs, such as capital, technique or facilities but also outcomes such as the market to sell the products (the collectors or the buyers) at a sufficient price. Additional, related institutions need to combine to examine, valuate the programs and

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projects on regular basis, ensuring the delivery of policies or plans in a right way, avoiding waste of resources and corruption. 3. Invest in essential infrastructure for the poor communes and areas: The regions where poverty is the most prevalent and deepest the Northern Uplands and Central Highland regions have difficult physical environments and poor infrastructure, which place serious constraints on residents being able to transport their production to larger market places or to access inputs to improve the quality of their production. Many provinces in the Northern Upland region reported that many households living in the highland areas were simply too remote and deprived of land and capital to take advantage of opportunities. A large number of the poor do not have access to markets because of their physical location. In the absence of policies that support more balanced growth, economic growth is likely to be concentrated in urban areas where market infrastructure already exists. As the majority of Vietnams poor live in rural areas it will be more difficult for them to access these markets. Around 20 per cent of the poorest communes are not linked by motorized road to elsewhere. These communes are mainly situated in the Mekong Delta, the Central region and the Northern mountainous areas. Even for those communes that do have roads, these roads are often not suitable for use in all types of weather making it impossible to travel these routes during the rainy sea. Therefore, infrastructure is the first priority to combat poverty in Viet Nam as well as in Northern provinces. Especially, the motorized roads ought to be built and improved, enable the linkage between the local area and the outside world, facilitate better market access to the poor products. For the recent years, Vietnam Government has implemented many programs focusing on infrastructures in some Northern localities, such as 135 and 133 program, which somehow returns in certain good signs of poverty reduction. 4. Better market access: a. Development of cooperatives and local encouragement departments in commune level:

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Geographical location is not likely to be the only explanation for the difficulty poor people face in accessing markets. Lack of information is also a significant factor. Many of the poor lack technical and market information required to effectively participate in markets the PPAs provided evidence of this (World Bank 1999a). Poor households will not be able to produce the type or quantity of goods demanded if they do not know the most efficient production methods. This limits their ability to take advantage of market opportunities created by growing incomes, expanding markets and changing consumer tastes. Therefore, there is a need for a more efficient agricultural extension service that can facilitate information flows to farmers. This analysis calls for the contribution of cooperatives or local agriculture encouragement departments in commune level, the organizations responsible for providing necessary methods of production as well as market information to the poor. b. Role of private trading firms: Lack of information in the agricultural sector also limits the scope for the poor to access markets. Without marketing information and an understanding of the linkages between suppliers and processors, the potential for adopting profitable agricultural and agro-based activities is limited and this prevents employment opportunities from emerging. Private trading firms often provide the bridge between producers and final consumers. These firms will often identify the types of products that are required by consumers, provide technical assistance on how to produce these products and handle transportation to the market. It is expected that such firms would play a greater role in the Northern Uplands in filling the information gaps in the future. 5. Improve productivity in agriculture and diversifying the rural economy: The poor in Uplands mainly rely on agriculture to earn their livings. However, backward or underdeveloped farming and the inclement natural conditions here result in incredible low productivity. Most of people cannot afford the basic need of foods and clothing. Consequently, the hunger and poverty are inevitable. Government and stake-holders could take actions to converse the situation, including transferring modern farming techniques, provide races of plants and animals which are suitable for natural conditions in each locality, modern agriculture tools, fertilizers, etc. The main objective is to make farmers know how to apply what are supported into production and promote quality and quantity of outputs.

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Another approach to this problem is diversifying the economy of the area. Instead of mere agriculture orientation, other sectors such as crafts or services need to be encouraged. Products from farming are low value added and do not ultimate the labor force because of seasonal factor. Furthermore, lack of advanced farming methods leads to inferior quality of outputs. So, stepping in other fields of production seems to be helpful. This helps not only make the most of labor force and endowment but also create more jobs with higher income. Taking Yen Bai province as an example, this area has advantages to develop tourism with beautiful sceneries or scenery pots. The local authority has policies to engage in this non-smoke industry. 6. Improve access to credit: Most rural households rely on informal credit sources. The poorest households and most upland people have no access to formal credit and rely on loans from relatives, friends and traders/moneylenders. Without access to credit, households are not able to invest in the equipment and supplies required to be active in markets. So it is essential to have systems of banks or credit institutions with a range of policies favoring the poor as much as possible, for example low interest rate loans and easy credit conditions. The poor people are subjects to financial aids, especially women because recent researches have revealed that most of the poorest households in the area are owned by women. These can enjoy supports from government or NGOs through local institutions such as associations of women and association of farmers. 7. Access to social welfare systems: Improving access of the poor, especially women and children to social health care services and the development of social safety nets for the poor and victims of natural disasters is very important. The poor are to enjoy free hospital or medical health care services and receive financial aids in case of natural disasters. Education Education is fundamental to development and is critical for the eradication of poverty. If investment in education can be effectively targeted there will be a sustained improvement in poverty. In particular, substantial international research documents have shown that there is a direct relationship between the

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education of women and girls and the reduction of poverty, illiteracy and disease (Fahey et al. 2000). However, many of Vietnams poor especially women, rural people and ethnic minority groups are not able to access educational opportunities. Many of the very remote areas where large numbers of the rural poor live do not have schools 88 per cent of Northern mountainous communes are estimated to have no local primary school or satellite school. If schools are available they are often difficult to get to. For example, in the Northern Uplands regions, it takes most students 40 to 50 minutes to walk to school (National Committee for the Advancement of Women 2000). So, systems of schools, especially the primary schools need to be put up throughout the area, ensuring all the residents to access to common education. In addition, there should be appropriate policies to attract teachers to the remote regions. 8. Promote human resources: Financial aids seem not to work in the long term so provide a long run program is important. The simple matter of fact is that the poor cannot stand on their own feed if they do not know how to eradicate difficulties by themselves. Successful development models should be enlarged and applied in other localities through transforming production techniques, experiences to the poor. Initial helps from government enable the success of the model in its early stage. The situation requires the capable leadership at all levels of authority, particularly at commune, village and hamlet levels to manage better the economic and social development of their localities. This also helps the area have closer integration of poverty reduction programs such as 133 and 135 ones.

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Group assignment Conclusion

Realizing the underlying causes of poverty in Northwest countries, the government has taken many actions such as investing in infrastructure, developing human resources or improving productivity in agriculture. Such actions have partly shown its effects. It is obviously that poverty and inequality has been gradually reduced day by day, year by year. If mentioned policies are conducted and monitored well, the results are expected to be seen very soon, and we can be optimistic about the future, when poverty is eradicated in Northwest provinces, as well as in the entire Vietnam. Only if this is done, our country can develop, upgrade into a stronger and wealthier nation in the world.

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Group assignment References

1. http://vi.wikipedia.org/wiki/V%C3%B9ng_T%C3%A2y_B%E1%BA%AFc_%28Vi

%E1%BB%87t_Nam%29
2. http://www.gso.gov.vn/default.aspx?tabid=230&ItemID=9960 3. www.fightpoverty.mmbrico.com/poverty/reasons.html 4. www.globalissues.org/.../causes-of-poverty 5. www.ausaid.gov.au/publications/.../vietnam_poverty_analysis.pdf 6. World Bank.1999.Vietnam development report. 2000. Country economic memorandum.

Washington D.C
7. Baker, J and Grosh, M. 1994 Poverty reduction through geographic targeting: how well

does it work?
8. General Statistic Office, 2000. Vietnam Living Standards Survey, Statistic Publisher.

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