Economic Development in Viet Nam : Its Impacts on the Society and Agriculture Production

Hoang Van Long

Mitsuyasu Yabe

Economic Development in

Viet Nam:

Its Impacts on the Society and Agriculture

Production

i 1 A p J L A M B E R T

Academ ic Publishing

Hoang Van Long

Mitsuyasu Yabe

Economic Development in Viet Nam:

Hoang Van Long

Mitsuyasu Yabe

Economic Development in Viet Nam:

Its Impacts on the Society and Agriculture

Production

LAP LAMBERT Academic Publishing

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Acknowledgments

There are uncountable people and institutions in which I would like to express

my gratitude that were involved in supporting me during my three-year doctoral

course and dissertation. First of all, I would like to express my thanks to Prof.

Mitsuyasu Yabe for his supervisions, comments and supports. He has been an endless

source of inspiration and encouragement to me during my Master and Doctoral

studies at Kyushu University. Without the support from my supervisor, my dream to

attain a PhD degree would not have been possible. In the Department of Agriculture

and Resource Economics of Kyushu University, I would like to also extend my

thanks to Prof. Shoichi Ito and Prof. Susumu Fukuda who had kindly accepted to be

the sub-supervisors of my dissertation approval committee.

For the first year of the doctor course, I would like to stress my thanks to Japan

Student Services Organization (JASSO) for granting me a one-year scholarship that

included the tuition fee. Without this support, the dream of my PhD course may not

become a reality.

For the second year of the doctor course, I would like to express my sincere

thanks to TAKASE Scholarship Foundation whom granted me the scholarship for

one year, as well as travel costs for meetings I attended in Tokyo. Without this

support, it would have been more difficult for me to overcome the financial burden of

my studies and I would have not been able to concentrate on my research.

For the second half of the third year in doctor course, again, I would like to

thank to JASSO for granting me a honor scholarship until I graduate. Without this

scholarship, I am sure that it is more difficult for me to overcome my living expense

and the tuition fee for the university in the last year of my course.

For my PhD dissertation research, I would like to give my special thanks to

The Fuji Xerox Setsutaro Kobayashi Memorial Fund whom granted me the necessary

financial support to conduct a survey and research in my home country. Without this

support, my research may not have been possible or successful.

Further, I would like to give my thanks to Rice Research Institute of Ha Noi

University of Agriculture and its leaders for help in the data collection process

through the course of my research, especially the staff whom provided data collection

and administration supports.

Next, I would like to send my thanks to JSPS, and the research fund from

MONBUSHO who provided the travel grants for the international conferences in the

U.S.A., Malaysia and Demark. These financial supports were very helpful, and

allowed me to gain access to academic societies in order to publish my research

papers.

In addition, I would like to thank the Research Institute of East Asia

Environment, Kyushu University for giving me the chance to study the

“Environmental Strategist Training Program” in one year with ten credits. From this

institute, I have received the financial support necessary to pursue an interesting,

meaningful and unforgettable internship for three months with the UN Habitat in Hoi

An city, Vietnam.

In my research laboratory of Environmental Economics, I would like to thank

to the laboratory’s assistant and my colleagues who have assisted me during my

studies, especially, Ms. Saori Shigematsu and Ms. Kumi Iwamoto for their various

administration supports. Further, I would like to thank my colleagues, Mr. Huynh

Viet Khai, Mr. Fadil Galawat, Mr. Joseph Arbiol, Mr. Masato To, Mr Kyle Johnson,

Mss. Fan Yue, Mss. Nicole Marie and too many others to mention here for their

ongoing supports and helps.

In the Institute of Policy in Strategy for Agriculture and Rural Development

(IPSARD) in Vietnam, I would like to give my thanks to the director of Division of

Strategy and Policy Research, Dr. Pham Bao Duong. He was my former boss when I

worked at IPSARD. and provided me with a lot of supports and ultimately

encouraged me to pursue my PhD research. Without his support, it would have been

much harder for me to come to Kyushu University for my doctoral course.

Nevertheless, I would like to thank to Mss. Ashley Hollenbeck who has been

my colleague since we work together as interns for UN Habitat in Viet Nam, for

spending her time to edit and proof read, giving me valuable comments in the early

draft of this dissertation. Without this help, it is more difficult for the readers who

want to get the right idea that I want to convey in this dissertation.

Finally, I would like to thank my family. First, I would like to thank my lovely

wife, Oanh who provided endless support for me during the time I studied. Second, I

would like to thank my lovely son, Due Linh who provided me with the energy, sprit

and motivation to complete my studies. Lastly, I would like to give my heartfelt

thanks to my parents who gave me a life, raised me and gave me the education

necessary for me to achieve my goals.

Thank you all.

Hoang Van Long

Fukuoka, August 2012

Abstract

This dissertation aims at analyzing the situation of income inequality and

estimating the impact of environmental factors to rice production in Viet Nam. The

dissertation comprises five major difference research papers. These researches focus

on the two main impacts from economic development in Vietnam. Firstly, it is about

social problem of income inequality. Secondly, the impact of environmental factors is

to rice production. Each researches use a different datasets for empirical analysis with

two datasets from authors’ survey and two datasets of VHLSSs (Viet Nam Household

Living Standard Surveys) for the year 2004 and 2008. The results from the studies

show five critical issues in Viet Nam at the moment. They are income inequality

between the Kinh and the ethnic minorities, the different of economic development in

between regions, the dimensional factors from agriculture production to income

inequality, the impact of environmental factors to rice productivity, and rice profit.

These results indicate the policy implications for solving these problems income by

providing more incentives for economic development for the ethnic minority,

prioritizing infrastructure development for remote areas and economic development

base on the comparative advantage of each region. Regarding to rice production, the

government needs to improve the irrigated water quality by using policy instrument

and economic instruments with polluters are recommended to minimize the

inefficiency of rice production for rice producers.

IV

Table of Contents

Acknowledgments......................................................................................i

Abstract...................................................................................................... iv

Table of Contents......................................................................................v

List of T ables............................................................................................ ix

List of Figures............................................................................................ x

Chapter 1: Introduction..........................................................................1

1.1. Background of the S tudy............................................................................................1

1.2. Statement of the Problem s......................................................................................... 1

1.2.1 Inequality and Food Security.................................................................................. 1

1.2.2. Economic Development and Environmental Degradation..............................2

1.2.3. Environmental Constraints fo r Agriculture Production...................................2

1.3. Objectives of the Study.............................................................................................. 2

1.4. Structure of the S tudy.................................................................................................3

1.5 Summary of the Dissertation..........................................................................................5

Chapter 2: Linking Economic Development with Social and

Environmental Issues in Vietnam.........................................................6

2.1. Introduction......................................................................................................................6

2.2. Economic Development Process in Viet N am ..........................................................6

2.3. Economic Development and Income Inequality.......................................................7

2.3.1. Income Inequality between Regions.................................................................... 7

2.3.2. Income Inequality among Ethnic Minority and Majority Populations........9

2.3.4. Income Inequality between Urban and Rural A rea s......................................10

2.4. Economic Development and Environmental Issues............................................... 11

2.4.1. Water Pollution and Land Contamination........................................................11

2.4.2. Air Pollution.......................................................................................................... 12

2.4.3. Solid Wastes............................................................................................................13

2.5. Orientations for Income Inequality and Environmental Problems......................14

2.5.1. Improvement o f Infrastructure for Economic Development......................... 14

2.5.2. Prioritizing Rural Areas fo r Economic Development.....................................14

v

2.5.2. Improvement o f System fo r Environmental Management...............................15

2.5.3. Enforcement o f Regulations fo r Environmental Protection.......................... 15

2.6. Concluding Rem arks..................................................................................................... 15

Chapter 3: Factors Affecting Household Income of the Kinh and the

Ethnic Minority in Rural Vietnam: A Case Study in the Buffer Zone

of Bach Ma National Park................................................................... 17

3.1. Introduction.....................................................................................................................17

3.2. Literature Review...........................................................................................................18

3.3. M ethodology.................................................................................................................. 20

3.3.1. Methodology’ o f Data Analysis.............................................................................20

3.3.2. Data Collection and D ataset............................................................................... 20

3.4. Results and Discussions............................................................................................... 23

3.5. Decomposition of Income Sources............................................................................27

3.6. Concluding Rem arks.....................................................................................................30

Chapter 4: Regional Difference of Economic Development in Rural

Viet Nam: Spatial Disparities and Policy Considerations...........32

4.1. Introduction.....................................................................................................................32

4.2. Literature Review...........................................................................................................33

4.2.1. Econometric Specification....................................................................................33

4.2.2. Descriptions o f the Dataset...................................................................................34

4.3. Results and D iscussions...............................................................................................38

5.4. Concluding Rem arks.....................................................................................................41

Chapter 5: The Change in Income Inequality Dimensions in Rural

Vietnam: A Perspective from Agricultural Production............... 42

5.1. Introduction.................................................................................................................... 42

5.2. Literature Review.......................................................................................................... 43

5.2.1. Regression-Based Approach................................................................................ 43

5.2.2. Vietnam's Footprints on Income Inequality and Economic Transition....45

5.2.3. O ven’iew o f Economic Development Polices in Vietnam Since Doi moi.. 41

5.3. M ethodology.................................................................................................................. 51

5.3.1. Econometric Specification....................................................................................51

5.3.2. Dataset and Variables...................................................................................... 52

5.4. Results and D iscussions............................................................................................... 55

5.5. Concluding Rem arks.....................................................................................................59

Chapter 6: The Impact of Environmental Factors on the Productivity

and Efficiency of Rice Production......................................................61

6.1. Introduction.....................................................................................................................61

6.2. Literature Review.......................................................................................................... 62

6.2.1. Overview o f Rice Production and its Characteristics in Viet N a m ..............62

6.2.2. Related Literatures to Efficiency Estimation o f Rice Production.................64

6.3. Research Area and D ata...............................................................................................66

6.3.1. Research Area.........................................................................................................66

6.3.2 D a ta ...........................................................................................................................69

6.4. M ethodology..................................................................................................................70

6.4.1. Analytical Fram ework......................................................................................... 70

6.4.2. Econometric Specification....................................................................................71

6.5. Results and D iscussions...............................................................................................72

6.5.1. Correlation o f Environmental Factors on Output and Production Inputs 73

6.5.2. Productivity Effect o f Inputs and Environmental Factor................................74

6.5.3. Production Inefficiency Effects............................................................................76

6.6. Concluding Rem arks.................................................................................................... 78

Chapter 7: Impact of Environmental Factors on Profit Efficiency of

Rice Production.......................................................................................79

7.1. Introduction.................................................................................................................... 79

7.2. Analytical Framework for Measuring Profit Efficiency....................................... 80

7.2.1. Analytical Fram ework..........................................................................................80

7.2.2. Frontier MLE and OLS Stochastic Profit F rontier........................................ 82

7.3. Research Area, Data and Econometric Specification.............................................83

7.3.1. Research Area and Data.......................................................................................83

7.3.2. Econometric Specification...................................................................................86

1 A. Results and Discussions.............................................................................................. 87

7.4.1. Profit Efficiency...................................................................................................... 87

vii

7.4.2. Profit Inefficiency and Profit-loss...................................................................... 90

7.5. Concluding Rem arks.................................................................................................... 93

Chapter 8: Conclusions and Policy Implications...........................94

8.1. Income Inequality..........................................................................................................94

8.1.1. Income Inequality between the Kinh and Ethnic Minorities......................... 94

8.1.2. Differences o f Economic Development between Regions.............................. 95

8.1.3. Dimensions fo r Income Inequality from Agriculture Production................ 95

8.2. Environmental Factors and Rice Production.................................................. 95

8.2.1. Environmental Factors and Rice Productivity................................................ 95

8.2.2. Environmental Factors and Rice Profit.............................................................96

References.................................................................................................97

Appendix: Questionnaire for Data Collection...............................102

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