Tài liệu Causes of poverty a case study of loc thanh village

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS, HO CHI MINH CITY BUI NHU DIEU CAUSES OF POVERTY A CASE STUDY OF LOC THANH VILLAGE MASTER OF PUBLIC POLICY THESIS HO CHI MINH CITY, 2013 MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS, HO CHI MINH CITY FULBRIGHT ECONOMIC TEACHING PROGRAM BUI NHU DIEU CAUSES OF POVERTY A CASE STUDY OF LOC THANH VILLAGE PUBLIC POLICY MAJOR Code: 60340402 MASTER OF PUBLIC POLICY THESIS SUPERVISOR DR. JOHNATHAN R. PINCUS HO CHI MINH CITY, 2013 i CERTIFICATION I certify that this thesis has not been submitted or being submitted for any degrees. I certify that I have acknowledged all information sources as well as reference document. The study does not necessarily reflect the views of the Ho Chi Minh Economics University or Fulbright Economics Teaching Program. Author Bui Nhu Dieu ii ACKNOWLEDGEMENT I would like to express deeply appreciation to my supervisor, Dr. Jonathan R. Pincus, who has helped me in performing the thesis. With rich knowledge, experience, thoughtful and patient, he has provided me a huge encourages to finish my thesis. I would like to thank all my teachers and friend in Fulbright Economics Teaching Program for wonderful time in this school. iii ABSTRACT The thesis focuses on finding the causes of poverty and the factors helping people escape from it. The causes of poverty in Loc Thanh village are unstable jobs, low returns from land and high dependency ratios. Failed investments in pepper farms and high interest debt are two main factor of decline. On the contrary, high returns from land are the factor that helps a majority escape from poverty. Good jobs are another path to exit poverty. Diversification of income sources not only helps household reduce the risks associated with agricultural markets but also helps them have a stable and reasonable income. Therefore, policies should focus on increasing farming investment and job opportunity creation. iv TABLE OF CONTENTS ACKNOWLEDGEMENT ............................................................................................................. ii ABSTRACT ...................................................................................................................................iii TABLE OF CONTENTS .............................................................................................................. iv ABBREVIATIONS........................................................................................................................ vi LIST OF TABLES ........................................................................................................................ vii LIST OF FIGURES ...................................................................................................................... vii LIST OF BOXES .......................................................................................................................... vii CHAPTER 1: INTRODUCTION ................................................................................................. 1 1.1 Problem Statement ................................................................................................................. 1 1.2 Thesis Objective ..................................................................................................................... 3 1.3 Research Question .................................................................................................................. 3 1.4 Structure of the Study ............................................................................................................. 4 CHAPTER 2: THEORETICAL BACKGROUND ..................................................................... 5 2.1 The Concept of Poverty.......................................................................................................... 5 2.2 Causes of poverty ................................................................................................................... 6 2.3 Poverty Reduction .................................................................................................................. 7 2.4 Data Collection ....................................................................................................................... 7 CHAPTER 3: FINDINGS .............................................................................................................. 9 3.1 Loc Thanh– a snap shot.......................................................................................................... 9 3.2 The poor – who are they? ..................................................................................................... 13 3.3 Why are they poor? .............................................................................................................. 19 3.3.1 Unstable jobs................................................................................................................. 19 3.3.2 Low returns to land ....................................................................................................... 20 3.3.3 Poverty and Dependents ............................................................................................... 21 3.3.4 Getting old and becoming poor .................................................................................... 22 3.3.5 Failed investment in pepper farms ................................................................................ 23 3.3.6 Poverty and debt ........................................................................................................... 24 3.4 Escaping from poverty ......................................................................................................... 25 3.4.1 Intensive farming .......................................................................................................... 25 3.4.2 Diversification .............................................................................................................. 27 v 3.4.3 Good jobs ...................................................................................................................... 27 CHAPTER 4: CONCLUSION AND RECOMMENDATION ................................................. 29 4.1 Conclusion............................................................................................................................ 29 4.2 Policy Recommendations ..................................................................................................... 30 4.2.1 Review the poor household list ..................................................................................... 30 4.2.2 Help farmers improve their farming skills, increase investment on their farms and diversify their income source ........................................................................................... 30 4.2.3 Create job opportunities ................................................................................................ 31 4.2.4 Prevent people from taking on high interest debt ......................................................... 32 4. 3 Limitation of this research................................................................................................... 32 REFERENCES ............................................................................................................................. 33 APPENDICES............................................................................................................................... 36 vi ABBREVIATIONS AusAID Australian Agency for International Development GSO General Statistics Office PCA Principle Components Analysis SES Socio- economic status VASS Vietnam Academy of Social Science VBSP Vietnam Bank of Social Policy VND Vietnam Dong vii LIST OF TABLES Table 3.1: Housing character by ethnic group .......................................................................... 14 Table 3.2: Housing character by ethnic group .......................................................................... 14 Table 3.3: Percentage of respondents do not have listed durable goods by ethnic group ........ 15 Table 3.4: Frequency of having meat per week by ethnic group (respondents,%) .................. 16 Table 3.5 : Frequency of having fish per week by ethnic group (respondents,%) ................... 16 Table 3.6: Access to sanitation facility by ethnic group ( respondents, %) ............................. 17 Table 3.7: Indicators use to build PCA score ........................................................................... 17 Table 3.8: PCA score by ethnic group ...................................................................................... 18 Table 3.9: Occupation of poor householders by ethnic (respondents) ..................................... 19 Table 3.10: Education of poor wage labor ............................................................................... 20 Table 3.11: Main crop of poor farmers (respondents) .............................................................. 20 LIST OF FIGURES Figure 1.1: Poverty proportion from 1993-2010 ........................................................................ 1 Figure 3.1: Poverty rate in Loc Thanh Village ......................................................................... 10 Figure 3.2: Poverty rate of Kinh versus local tribes ................................................................. 12 Figure 3.3: Distribution of PCA score ...................................................................................... 18 LIST OF BOXES Box 3.1: Out of the poor list ..................................................................................................... 11 Box 3.2: Getting old, becoming poor. ...................................................................................... 22 Box 3.3: Health care and debt .................................................................................................. 11 1 CHAPTER 1: INTRODUCTION 1.1 Problem Statement Historically, poverty has always been a major concern of governments. Most countries – regardless of location or political regime - consider improving residents’ living conditions as an important objective. Hence, reducing the incidence of poverty is the first target of the Millennium Development Goals (MDGs) established by United Nations in 2000. In retrospect, Vietnam has achieved remarkable progress in poverty reduction. From 19932008, about 30 million people escaped from poverty (VASS, 2011). This has helped Vietnam accomplish the first goal of the MDGs and the country has been widely applauded by the international community. Figure 1.1: Poverty proportion from 1993-2010 70% 60% 58.1% 50% 37.4% 40% 28.9% 30% 18.1% 20% 15.5% 13.4% 14.2% 10% 10.7% 0% 1993 1998 2002 2004 2006 2008 2010 Source: VASS (2011) and GSO (2010) The percentage of the population living in poverty decreased quickly from 58.1 percent in 1993 to 18.1 percent in 2004, dropping by 3.6 percent every year. Broad-based economic growth was the main cause of improvements in living standards. “In turn, rapid and propoor growth is explained by a series of far reaching market reforms undertaken in the 1990s and the early 2000s” (VASS, 2006, p.15). From 2004-2010, the proportion declined slightly about 0.7 percent every year, from 18.1 percent to 10.7 percent. In 2010, the number climbed up to 14.2 percent if the poverty line 2 of period 2011-2015 is applied.1 This increase reflects the fact that there are many people living around the margins of poverty. A slight rise in the poverty line or fall in their incomes could send them back below the poverty line. Economic growth is good for the poor but all of the poor do not benefit from growth, especially individuals and households whose incomes are very far below the median income (Pincus, 2012). The VASS report also agrees with this idea “…. despite the general impressive achievements, progress in poverty reduction has been uneven across different groups of the population” (VASS, 2011, p.6). Still, the poverty rate in rural areas is higher than that in urban areas. While the number in urban areas is only 5.1 percent, it was still 13.2 percent in rural areas. Poverty tends to be higher in rural than urban areas because of the lack of access to employment opportunities and lower average labor productivity in rural areas. There are fewer ways to earn income, less education, health care and even more vulnerability to the weather and forces of nature (Perkins, 2006, pp.218-219). This proportion is not only different by area but also by ethnic group: As reflected in the changed poverty profile, the largest difference in the progress made in poverty reduction was between the Kinh/Hoa group and ethnic minorities, with poverty rate rapidly falling for the former (from 53.9 percent in 1993 to only 9 percent in 2008) but only modestly declining for the latter (from 86.4 percent in 1993 to 50.3 percent in 2008) (VASS, 2011, p.xiv). As a matter of fact, a deep understanding of why some people can exit from poverty and some fall deeper into it, or stay in that difficult situation needs to be revealed. Studying the causes of poverty and economic strategies of poor households provides a solid basis on which to formulate policy. “A common and clear understanding of poverty helps build a common agenda with development partners, linking specific causes of poverty in each setting with suitable policies and actions (OECD, 2001, p.18). Hence, identifying the main causes of poverty is the first step to constructing a sustainable poverty reduction program. In addition, the poor themselves are not waiting for the benefits of economic growth or government programs but also apply many strategies to generate income and find their way 1 . The official poverty line for period 2011-2015 is VND 400,000 per person per month in rural and VND 500,000 per person per month in urban area. The official poverty line in 2010 is VND 350,000 per person per month in rural and VND 440,000 per person per month in urban area 3 out of difficult situations. A deep understanding of why people fall into poverty and what they are doing to exit will provide a solid basis on which to build reasonable poverty reduction policies. Therefore, this thesis will study the causes of poverty and strategies applied by poor households to escape poverty. In view of limitations of time and data, the author was not in a position to address the question on the national or regional level. Instead, the author has carried out a case study of one village, Loc Thanh Village, to explore the dynamics of poverty. This border village has similar characteristics to other locations in Binh Phuoc. Fifty percent of the population consists of ethnic minorities including the two main local groups in Binh Phuoc: Khmer and S’Tieng. The location also has a high percentage of residents living in poverty. The three main crops of Binh Phuoc are cashew, rubber and pepper, and all are cultivated in this village. Thus the location was viewed as a suitable place to study the causes of poverty and households strategies in Binh Phuoc province. Of course the results of a case study cannot be generalized to the province as a whole, but case studies do help identify issues and processes that can be explored on a larger scale in future research. 1.2 Thesis Objective This research is written as a case study so the immediate relevance of the findings is limited to the research area. However, it is hoped that the study contributes to an in-depth understanding about the main causes of poverty and economic activities that poor people are adopting. This research also looks at non-poor households’ economic strategies to find out core factors that help them to escape from poverty. Based on the results, the study suggests policies that assist poor families exit from poverty, and also point to future avenues for productive policy research. 1.3 Research Question As stated above, this research will attempt to answer the following questions: - Why do some people fall into poverty and others do not? - What are people doing to escape from poverty? 4 1.4 Structure of the Study The thesis has four chapters. Following this introduction, Chapter Two presents the theoretical background, including the concept of poverty and studies concerning poverty and poverty reduction. It also describes the research methodology and data collection method. Chapter Three discusses the findings. In this chapter, the interesting story of why people are poor and how they escape from poverty will be told. The last chapter concludes and summarizes the thesis and policy recommendations. 5 CHAPTER 2: THEORETICAL BACKGROUND 2.1 The Concept of Poverty Poverty is widely understood as income or consumption below a minimum accepted standard as represented by a poverty line. There is no universally accepted poverty line, and richer countries adhere to a higher standard. However, the World Bank has regularly provided poverty headcount rates for the $1.25 per day poverty line as measured in purchasing power parity terms. However, many countries have their own levels. In Vietnam, the official poverty lines are VND 400,000 per person per month for rural areas and VND 500,000 per person per month for urban regions (Decision No. 09/2011/QĐ-TTg issued by Prime Minister on 31/10/2011). Collecting expenditure information requires much information about consumption. This information is built up in a long questionnaire, which takes several hours to administer. In addition, people hardly remember exactly what they buy and the price of each good or service. “[T]he data collection is often of dubious reliability, given recall problems and the impossibility of verifying most of the information provided” (Ngan, Pincus and Sender 2012, p. 44). Moreover, poverty is dynamic, people frequently move in and out of poverty. Some are chronically poor, but others are only temporarily in a difficult situation. In 2012, Ngan, Pincus and Sender introduced an index of scocio-economic status (SES). Durable goods, housing conditions, access to clean water and sanitation facilities were used to measure living standards. “Data collection is quick and easy, and there is less room for error because most indicators can be visually checked” (Ngan, Pincus and Sender 2012, p.44). Observation of housing conditions, durable goods, santitation and consumption of high nutrition food will shed the light on who is poor and who is not. Recently, the concept of multi-dimensional poverty has gained acceptance. It not only covers minimum human needs but also includes access to basic social services and human rights. According to OECD (in DAC guidelines) the dimensions of poverty cover distinct aspects of human capabilities: economic (income, livelihoods, decent work), human (health, education), political (empowerment, rights, voice), socio-cultural (status, dignity) and protective (insecurity, risk, vulnerability). The Australian Agency for International Development (AusAID, 2002, p.6) introduced four criteria to measure well-being including: 6 - adequate resources for attaining the basic necessities of food, water, shelter and clothing; - access to acceptable levels of health and education; - accountability from state institutions and civil society; and - freedom from excessive vulnerability to adverse shocks This understanding is reflected somewhat in Vietnam’s poverty reduction policy. Although the government uses an official poverty lines to identify the poor, all policies are targeted to develop human capital, increase access to basic social services like education and medical care and to improve knowledge of citizens about people’s rights under the law. In this thesis, two main concepts of poverty will be used. First, the official line is used to present secondary data as well as provide a general view of poverty in the research location. Similar indicators of SES are applied to identify poor households at the local level. 2.2 Causes of poverty According to the OECD, the causes of poverty vary with history, geography and governance. Wars, armed conflict and failed states are associated with poverty in all regions of the world. Corruption, rent-seeking, violations of human rights, inefficient bureaucracies and a lack of commitment to institution reform are all obstacles to poverty reduction (OECD, 2001). Environmental degradation, gender discrimination and rapid population growth also result in poverty. Observing 35 villages in India, Krishna also finds that “poverty has some distinctly local antecedents” (Krishna, 2004, p.121). In this paper, he concludes that poverty is combination of many factors. Three principal factors are health, debt, and social expenses. Health problems and heavy expenses on healthcare account for a majority of households that fall into poverty. Unexpected expenditures drive people to private debt with high interest rates. In these villages, funerals and wedding expenses were heavy. This is another reason for falling into poverty. The three factors combined made up 85 percent of households that became poor. Losing jobs, facing unexpected expenditures like hospital costs or the need to look after small children can also reduce income and send households into poverty. 7 2.3 Poverty Reduction There is no common answer for all poverty problems. Although “growth is good for the poor,” economic growth itself, however, is not enough for poverty reduction among the poorest groups of the population (Dollar and Kraay 2001, Foster and Szekely 2008). In Krishna’s paper, reliable healthcare services and available consumption loans at appropriate interest rates reduce the risk of falling into poverty. Bridging the gap with the city can provide opportunities to diversify income sources. Agreeing with this, Pincus (2012) suggested that policies including increasing investment in education, in agricultural productivity, and reducing obstacles to mobility could accelerate poverty reduction. In addition, Krishna finds that diversification of income sources is the most important factor in helping households escape from poverty. Reliable information sources are the key to successful diversification. Diversification is defined as changing the nature of full time work rather than working at multiple jobs. There are six factors affecting income diversification in rural areas: crops, risk, labor markets, credit markets, asset strategies, coping behavior (Tran Tien Khai, 2010). 2.4 Data Collection To eliminate inaccuracy in identifying poor households, the thesis uses snowball sampling, a technique for finding research subjects in which subjects provide names of additional respondents (Vogt, 1999 cited from Atkinson and Flint (2001). Target respondents consisted of 2 groups: Group 1: Poor households classified by people in the village. Group 2: Non-poor households identified by residents. The research began by contacting leaders of Loc Thanh People’s Committee for general information about the area including economics, population and social conditions. In this conversation, the two vice presidents told us about major crops in the village, the distribution of local tribes, infrastructure and existing programs to reduce poverty. 8 Secondly, we had meetings in three hamlets: K’Lieu, Loc Binh I, Can Duc. K’Lieu hamlet is at the center of the village. Located here are the People’s Committee office, the local clinic, the primary and secondary school, and the only market of the village. This hamlet has two sok (sub-hamlets) of Khmer and many Kinh people live here. All of the villagers in Loc Binh I are S’Tieng– this is considered the poorest hamlet according to the villagers. All residents in Can Duc are Khmer. In meetings at the hamlet level the author collected information about how each ethnic group was doing, their habits, their customs and their living standards. Third, individual interviews with questionnaires were made. Respondents also discussed their life stories; some were successful, some less so. Information was sought about poor and rich families in the communities in order to identify the poorest as well as some households that have sustainable livelihoods. This turned out to be a sensitive question. People shared the names of disadvantaged families, but for the rich ones they just gave hints. Sometimes respondents’ neighbors also took part in the conversations, and helped respondents remember their story about why they fell into poverty or how they succeeded. The guides (usually the chief of the community, Farmer’s Union officers and so on) also provided a lot of information about the respondent. The guides talked about the respondent’s character such as whether they worked hard or they were addicted to alcohol, their family’s story, their difficulties as well as their opportunities and how long they have been living in the village. We also observed the condition of interviewee’s house, the material of the floor, walls and roof, their clothes and their meals. This information would help distinguish the truly poor from those who are not. 9 CHAPTER 3: FINDINGS 3.1 Loc Thanh– a snap shot Loc Thanh village is located in the west of Loc Ninh District (Binh Phuoc Province). It has a 12.5 km border with Cambodia. Loc Thanh has nine communes and 1,064 households. One-third of the population is Khmer who mostly live in K’lieu and Can Duc hamlets. One-third of residents are S’Tieng, and they live mainly in Ta Te 1, Ta Te 2 and Loc Binh I hamlets. These are the two main local tribes of Binh Phuoc province. As is traditional, ethnic minorities live together in groups. A hamlet might have one or more than one sok. Kinh people live in seven hamlets, predominantly in Loc Binh II, Tan Binh I, Tan Binh II and Tan Mai. General economic situation Agriculture accounts for 86 percent of GDP in Loc Thanh village and the rest comes from trade and the service sector (People’s Committee of Loc Thanh village, 2012). The main crops of this area are rubber, pepper, cashew and rice. The local tribes in Loc Binh I, Tà Tê I and K’lieu hamlets grow mainly rice and cashew. In Loc Binh I, a private rubber company let poor families intercrop rice on their rubber farm. Poor workers clear grass on rubber farms in return. As they have to share this job with many other families, their yields are only enough for their own consumption. Cashew has been grown here for a long time. It easy to grow and does not cost much to cultivate. Ethnic minorities first grew cashews for their own consumption, and then Kinh traders came to buy it and people could earn a lot from selling cashew nuts. This type of tree became one of the major crops in this village. The Khmer in Can Duc hamlet have the highest living standards compared to other minority groups in other hamlets. They grew rubber along with cashew. They diversify their incomes with other activities like trading fertilize, pesticides and other goods. Kinh economic strategies are more varied. They work in agriculture as well as nonagriculture. They grow cashew, rubber, pepper and other annual crops; they also raise many different kinds of animals, including poultry and cattle, to diversify their incomes. 10 Infrastructure This village is building its infrastructure. The main road connecting the village to the center of the district is paved. Roads to remote hamlets, where ethnic minority people mostly live, have recently been built. Even though they are wide and clear, they make transport easy in the dry season but they get muddy in the rainy season. The villagers mainly use motorbikes as transportation. The share of households that have electricity is 85 percent. Households that not have power for lighting are mostly in Ta Te II as this is a new hamlet; all of the infrastructure is under construction. Everyone living in the research region uses water from a well. They may have their own well or share with their neighbors. Loc Thanh has one junior high school, two primary schools and six classrooms in remote hamlets. Thanks to these facilities, all of the children at primary age can go to school (Loc Thanh People’s Committee). Poverty in Loc Thanh There are two main poverty trends in Loc Thanh. First, the poverty rate declined sharply from 2011 to 2013. Second, the percentage of ethnic minorities living in poverty is on an upward trend. As is common, the poverty rate of Loc Thanh village dropped rapidly over the last three years. From 2011-2013, there were 117 households that escaped from poverty. Figure 3.1: Poverty rate in Loc Thanh Village 18% 16% 17% 15% 14% 14% Poverty rate 12% 11% 10% 8% 2010 2011 2012 2013 Source: Loc Thanh People’s Committee (2009-2012) 11 Due to a revision of the poverty line, the headcount poverty rate climbed up to 17 percent in 2011. From that year, the share of households in poverty dropped about three percent every year. This rate of decrease is exactly equal to the local government’s target for the years 2009-2013. There are nine hamlets in this village. This means that each hamlet has to lift about four to five poor households out of poverty each year. Some households really do escape from poverty, but some do not. It is not clear if the local government is meeting its poverty reduction target by removing poor or non-poor households from the poor household list (see Box 3.1) Box 3.1: Out of the poor list Mrs Kê’s husband just passed away in January. He had been coughing heavily, but they did not have enough money to bring him to the hospital. After a long cough, he was gone. Their neighbors donated some money so they could bury him. This year, a private rubber company let Mrs Kê grow rice in their rubber farm. She harvested 30 bags of rice. Hence, the chief of her hamlet took her off the poor household list. In the same situation, Mr Tran’s family will be off the poor list this year. Their economic status has not improved. However, to meet the target, five households in this hamlet have to be removed from the list. Because he is a gambler and a drinker the hamlet did not get a “Cultural unit” title last year. Therefore, his household was the first to be eliminated from the poor household list. *All names in this report have been changed to protect the privacy of respondents. This situation could occur because the official poverty line is inappropriate. Four hundred to VND 500,000 per person per month is not enough to provide 2,100 Kcal per person per day (Mai Thi Xuan Trung, 2011). Thus, with the average daily wage of VND 100,000120,000, a laborer can reach this level in four to five working days. However, this sum of money only can help them escape from hunger but not from poverty. As the poverty line is too low, mostly hamlet dignitaries decide who are registered as poor in their hamlets. As the result, some households that really need help have to be left out of poor lists and vice versa. Another important point in the poverty picture of Loc Thanh is the increasing gap between the Kinh group and ethnic minorities. This is another challenge to reducing poverty in this