UNIVERSITY OF ECONOMICS
HO CHI MINH CITY
VIETNAM
ERASMUS UNVERSITY ROTTERDAM
INSTITUTE OF SOCIAL STUDIES
THE NETHERLANDS
VIETNAM – THE NETHERLANDS
PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS
MULTIDIMENSIONAL POVERTY IN THE SOUTHERN
REGION OF VIETNAM
BY
TRUONG DAT ANH
MASTER OF ARTS IN DEVELOPMENT ECONOMICS
HO CHI MINH CITY, OCTOBER 2016
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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
MULTIDIMENSIONAL POVERTY IN THE SOUTHERN
REGION OF VIETNAM
A thesis submitted in partial fulfilment of the requirements for the degree of
MASTER OF ARTS IN DEVELOPMENT ECONOMICS
By
TRUONG DAT ANH
Academic Supervisor:
DR. TRAN TIEN KHAI
HO CHI MINH CITY, OCTOBER 2016
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DECLARATION
I assure that the entire contents of this thesis (Multidimensional poverty in the Southern
region of Vietnam) are written by me and the contents are based on my knowledge and my
review of literature. This thesis has not been submitted for any degree and I am responsible
for entire contents I wrote.
TRUONG DAT ANH
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ACKNOWLEDGEMENT
I would like to express profound thanks to A/Prof. TRAN TIEN KHAI because of the dedicated
guidance and supports during thesis time. The opinions and comments of supervisor play a
significant role in my thesis.
Moreover, I sincerely thank Prof. NGUYEN TRONG HOAI, Dr. TRAN KHANH NAM, Dr. TRUONG
DANG THUY and lecturers – officers of Vietnam Netherland program. Thanks to lecturers, I
have accumulated a variety of knowledge to finish study modules and support for my thesis.
Finally, I wish lecturers had many success and advantages in career in the future and a growing
number of research projects to contribute for the economy of Vietnam.
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ABBREVIATION
GSO: General statistics offices
WB: World Bank
WHO: World health organization
MPI: Multidimensional poverty index
VHLSS: Vietnamese Household Living Standard Survey
GDP: Gross domestic product
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ABSTRACT
This thesis researches about multidimensional poverty in rural area of the Southern region of
Vietnam. The research scope is 19 provinces, separated into area the Southeast region and
the Southwest region. Based on VHLSS 2014 data set of General Statistic Offices of Vietnam,
1977 households have filtered to examine. Alkire & Forster approach have applied and
established a framework include 20 indicators and 6 dimensions, which are suitable for the
reality and data availability in the Southern region of Vietnam. Using the methods of Chi2 test
and descriptive statistics, this thesis found some relationships between household
characteristics and poverty status. Besides, there are some differences in poverty status
among provinces and areas. Hence, poverty policies used for tackle poverty status should
focus to reasonable targets to ensure efficient and effective.
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TABLE CONTENTS
CHAPTER I: INTRODUCTION .............................................................................................. 1
1.1 Research problem ............................................................................................................... 1
1.2 Research objective .............................................................................................................. 3
1.3 Research question............................................................................................................... 3
1.4 Research hypothesis ........................................................................................................... 4
1.5 Research scope ................................................................................................................... 4
1.6 Organization of research..................................................................................................... 4
CHAPTER II: LITERATURE REVIEW ...................................................................................... 5
2.1 Poverty and measurement ................................................................................................. 5
2.1.1 The concept and measurement of uni-dimension poverty ...................................... 5
2.1.2 Concept and measurement of Multidimensional poverty ....................................... 7
2.2 Empirical studies ............................................................................................................... 11
CHAPTER III: RESEARCH METHODOLOGY......................................................................... 15
3.1 Research methodology ..................................................................................................... 15
3.2 Multidimensional poverty index ....................................................................................... 15
3.3 Conceptual framework .................................................................................................... 18
3.4 Dimensions and indicators ................................................................................................ 23
3.5 Data sources...................................................................................................................... 24
CHAPTER IV: RESULTS ..................................................................................................... 26
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4.1 The choice of cutoff ratio k ............................................................................................... 26
4.2 Multidimensional poverty and uni-dimensional poverty ................................................. 30
4.3 Multidimensional poverty across regions......................................................................... 31
4.4 Multidimensional poverty across provinces ..................................................................... 33
4.5 Dimensions contribution to multidimensional poverty index .......................................... 36
4.6 Household characteristics and multidimensional poverty ............................................... 38
4.6.1 Poverty status and demographics of household .................................................... 38
4.6.2 Poverty status and dimensions (indicators) ........................................................... 44
CHAPTER V: CONCLUSION ............................................................................................... 55
5.1 Summary ........................................................................................................................... 55
5.2 Conclusion and recommendation ..................................................................................... 56
5.3 Limitation and further research ........................................................................................ 58
References ..................................................................................................................... 60
Appendix........................................................................................................................ 63
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APPENDIX
Appendix 1: source of data in VHLSS 2014 ............................................................................. 63
Appendix 2: Spearman test result of five characteristics of a household .............................. 64
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AP
LIST OF TABLES
Table 2.1: Poverty threshold of Ministry of Labor, Invalid and Social Affairs in Vietnam from
1998 to 2015 .............................................................................................................................6
Table 2.2: Poverty threshold of General Statistic Office in Vietnam from 1998 to 2010 and
later ...........................................................................................................................................7
Table 2.3: 5 dimensions and 10 indicators of General scheme 2015 ..................................... 11
Table 2.4: Livelihood assets and dimensions of Tran & Nguyen (2012) ................................. 13
Table 2.5: Set of dimensions and indicators of Salaza et al. (2013) ....................................... 14
Table 3.1: Choice of dimensions and indicators ..................................................................... 19
Table 3.2: Dimensions and indicators ..................................................................................... 23
Table 3.3: Number of households in provinces ...................................................................... 25
Table 4.1: The influence of cut off ratio k ............................................................................... 26
Table 4.2: Spearman correlation result of indicators and income of household and p-value
................................................................................................................................................. 29
Table 4.3: Gender of head of household and multidimensional poverty status .................... 39
Table 4.4: Ethnic of head of household and multidimensional poverty status ...................... 40
Table 4.5: Number of member in household and multidimensional poverty status ............. 41
Table 4.6: School year of head of household and multidimensional poverty status ............. 42
Table 4.7: Age of head of household and multidimensional poverty status .......................... 43
Table 4.8: Poverty status and deprivations of indicators in dimension of education ............ 45
Table 4.9: Poverty status and deprivations of indicators in dimension of employment ....... 46
Table 4.10: Poverty status and deprivations of indicators in dimension of health ................ 47
Table 4.11:
Poverty status and deprivations of indicators in dimension of living standard
................................................................................................................................................. 49
Table 4.12: Poverty status and deprivations of indicators in dimension of monetary .......... 52
Table 4.13: Poverty status and deprivations of indicators in dimension of social capital ..... 54
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LIST OF FIGURES
Figure 2.1: Theory framework of Alkire & partners (2014) ......................................................9
Figure 3.1: Conceptual framework ......................................................................................... 18
Figure 4.1: relationship of headcount ratio H and cutoff ratio k ............................................ 27
Figure 4.2: The relationship of average intensity A and cutoff ratio k ................................... 28
Figure 4.3: Rate of uni-dimensional poverty and multidimensional poverty in nineteen
provinces ................................................................................................................................. 30
Figure 4.4: The comparison of four dimensions between the Southeast region and the
Southwest region (Education, employment, health and social capital) ................................. 32
Figure 4.5: The comparison of two dimensions between the Southeast region and the
Southwest region (Living standard and monetary) ................................................................ 33
Figure 4.6: Headcount ratio H and Average intensity A in 19 provinces ................................ 35
Figure 4.7: Adjusted headcount ratio (Multidimensional poverty index) for provinces ........ 36
Figure 4.8: Contribution of dimensions .................................................................................. 37
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CHAPTER I
INTRODUCTION
In this chapter, there are five main parts, research problems, research objectives, research
questions, research hypothesis and research scope. This chapter focus to propose the real
situation of the Southern region of Vietnam and the role of research targets. Besides, the
following parts will answer the questions: “Why this research is necessary?”; “What is the
purposes of this research?”
1.1 Research problem
Poverty is a considerable problem of every nation, especially for developing countries. Based
on the poverty status of a nation, policy maker would able to declare suitable decision. In
recent years, poverty in Vietnam is measurement depend on monetary perspective. It means
the particular household would be considered poor if the income or expenditure were lower
than social standard (which is set by the Government). Specially, the Southern region of
Vietnam plays a very important role in nation’s economy in term of its contribution to GDP,
labor force, food supply, etc. Consequently, the most important work is determine poverty
status effectively, entirely and representatively
Locating at the South of the country, this region is separated into two smaller areas, the
Southeast region and the Southwest region. In the Southeast region, there are six provinces
in this region: Binh Phuoc, Binh Duong, Tay Ninh, Dong Nai, Ba Ria – Vung Tau and Ho Chi
Minh city. The other counterpart includes 13 provinces: Long An, Tien Giang, Ben Tre, Vinh
Long, Tra Vinh, Dong Thap, Hau Giang, Soc Trang, An Giang, Kien Giang, Bac Lieu, Ca Mau and
Can Tho city. The Southern region of Vietnam borders with Cambodia and capture a long
coastline of South China Sea and Gulf of Thailand. Total area of the Southern region of
Vietnam is about 64,151 thousand square kilometers. Natural features of this region are
conducive for agriculture, livestock and tourism with dense river systems (total length of up
to 5,700 kilometers), high rainfall (1,500-2,000 millimeters a year) and fertile soil (slob and
basaltic soils).
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Besides, the Southern region of Vietnam is a major economic region of the country separated
into two key economic zones. Southern Key Economic Zone and Mekong Delta Key Economic
Zone are contributing to the whole economy significantly, about 59% to total GDP of
Agricultural sector of Vietnam in 2011. Infrastructure and logistic systems in Southern are
developed with Tan San Nhat international airport and many seaports connected by
convenience road systems. Specially, manufacturing and services are the major sectors of the
Southern and contribute 60% of manufacturing and services sector of county in 2011.
However, behind the scenes, according to the Vietnam Human Development Report of UNDP
in 2015, the ratios of poor people are 13.4% in the Southeast region and 41.6% in the
Southwest region compared to 21.3% in total of the country. The infant mortality rate is high,
occupying 8/1000 births in the Southeast and 11/1000 births in the Southwest. In addition,
child malnourish proportion is about 20% in this area. These figures pose the issues that a
large part of residents in the Southern are now living under poor status and having poor life
condition. Hence, the measurement of poverty is needed to illustrate and analyze the poverty
status in this area not only in economic perspective but also in social perspective.
Moreover, poverty status is different among provinces and areas, especially urban area and
rural area. According to General Statistics Office (GSO), about 70% of Vietnamese are now
living in rural area and a large part of them are not having good living conditions. This study
will focus only on rural area because poverty is much more severe and broaden compared to
urban area.
According to Sen (1976), poverty could able to measure in multidimensional approach, which
is called multidimensional poverty. This is a broader indicator to represent for poverty status
of a country. Poverty is not only comes from monetary problem but also come from
education, health, living standard, etc. This paper will focus to estimate multidimensional
poverty of the Southern region of Vietnam; build up suitable dimensions and indicators set;
compare the poverty status among households and areas.
Tran & Nguyen (2012) showed there are nine dimensions of poverty in rural area of Vietnam,
or Tran (2014) also point out equivalent result, both of methodologies are Principal
Component Analysis & Multiple Correspondence Analysis.
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The latest research in national scale published in 2015 is the cooperation of Ministry of Labor,
Invalid and Social Affairs and UNDP. This research called “General scheme of transformation
approach from measuring uni-dimensional poverty based on income applicable to
multidimensional in period of 2016-2020”. The purposes of this research are: (i) to estimate
the deprivation of social societal needs during periods, (ii) to determine multidimensional
poverty households, (iii) to determine the root cause of multidimensional poverty. Moreover,
this research also suggest 5 dimensions and 10 indicators to measure multidimensional
poverty status in Vietnam.
However, these previous empirical studies for Vietnam only estimate which is the suitable
dimensions, no relationship or affect among Multidimensional poverty and these dimensions
have found. In short, the main purpose of this paper will measure the Multidimensional
poverty for the Southern region of Vietnam and find out the differences of Multidimensional
poverty and household’s characteristics. More detail will be described in the following
section.
1.2 Research objective
To prove the important role of Multidimensional poverty measurement and find the best
methodology for the measurement, this paper focuses on four following objectives:
1. Determine suitable dimensions to measure multidimensional poverty household.
2. Compare multidimensional poverty between the Southeast region and the Southwest
region.
3. Compare the differences of multidimensional poverty among households with in the
Southern region of Vietnam
4. Give recommendation to policy makers.
1.3 Research question
1. What are the suitable set of dimensions and indicators for rural household in Southern
Vietnam?
2. What are the differences between the Southeast region and the Southwest region of
Vietnam in term of multidimensional poverty?
3. What is the difference among households’ characteristics in the Southern region of
Vietnam in term of multidimensional poverty?
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1.4 Research hypothesis
1. The Southeast region is better than the Southwest region of Vietnam in term of
multidimensional poverty.
2. There is no differences among households in the Southern region of Vietnam in term of
multidimensional poverty.
1.5 Research scope
The scope of this research is rural area of the Southern region of Vietnam, including 19
provinces. Binh Phuoc, Binh Duong, Tay Ninh, Dong Nai, Ba Ria – Vung Tau and Ho Chi Minh
city, Long An, Tien Giang, Ben Tre, Vinh Long, Tra Vinh, Dong Thap, Hau Giang, Soc Trang, An
Giang, Kien Giang, Bac Lieu, Ca Mau and Can Tho city. All statistic and data in this research
are based on VHLSS 2014 data set published by GOS. All observations, which are not in this
scope, have eliminated.
1.6 Organization of research
This research includes five chapters. Chapter 1 is the introduction part of the thesis. Chapter
2 gives basic concepts in poverty and some empirical studies relevant to multidimensional
poverty. Moreover, there are also a summarize table of literature review and theory
framework in chapter two. Chapter 3 will present the methodology and approach of
multidimensional poverty. Chapter 4 and 5 will contain the result of this research and
recommendation to policy maker.
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CHAPTER II
LITERATURE REVIEW
The previews of literature and empirical studies will be presented in this chapter. Some
concept about poverty and multidimensional poverty will be defined and summarized.
Moreover, this chapter also reviews about methods, approaches and findings of several
empirical studies on over the world and in Vietnam.
2.1 Poverty and measurement
2.1.1 The concept and measurement of uni-dimension poverty
There are several definitions of poverty on over the world, these definitions is different
because of the aspects and standpoint. However, the similarity is an individual or a household
is suffering insufficient conditions (physical and/or mental).
In early 19th century, Rowntree (1910) suggested that poverty is status of lack of money to
purchase basic things (see Nguyen, 2010). This definition is similar to monetary poverty
perspective, which have been using in some developing countries. Later on, in 1995, at the
“World summit for social development Copenhagen” held in Copenhagen, Denmark proposed
that a person is considered as poor if his or her income is lower than $1 a day.
World Bank suggests the definition of poverty in a much more specific way. The poor suffer
the deprivation in basic goods and services such as education, health care, nutrition; they are
vulnerable and have no power in national institution (World Bank). Therefore, in this
definition, poverty can exist if living conditions of people are under the average levels of the
community.
Absolute poverty and relative poverty
There are several points of views in definition of absolute poverty and relative poverty, which
are widely used around the world. The similarity of these two concepts is the deprivation of
basic need and/or the deprivation of rights and social position of an individual or household.
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To deal with this issue, World Bank (2000) suggested that absolute poverty is the deprivation
of minimum basic need of life and might face diseases, malnourish, etc. Relative poverty is
the deprivation of a person, a group of people in this area compared to another area or this
country compared to another country. In addition, Bellu and Liberati (2005) also mentioned
to this issue and suggested that relative poverty is an unequally of income and the quality of
life. Statistics and measurements used to compare between observations are therefore
relatively. Following the same perspective of inequality, Asia Development Bank (2012)
suggested, “The poor are those who gain when income becomes more evenly distributed and
the non-poor are those who lose”. Hence, poverty is the gap between the poor and the rich,
the bigger gap the more poverty. When it comes to absolute poverty, it is a deprivation of a
certain figure or statistic, for example, according to “World summit for social development
Copenhagen” in 1995, absolute poverty is the status of a person who is living with under $1
income a day.
Poverty threshold
In Vietnam, poverty threshold (poverty line) is a threshold used to determine whether a
household is under poverty or not. There is a difference in poverty threshold between the
approaches of General Statistic Office and Ministry of Labor, Invalid and Social Affairs.
The government issues this threshold in a period of five-year. For example, according to
“Decision No 170/2005 / QD-TTg”, a household will be classified as poor if the average income
of a member per month is less than 200,000 VND for rural area. In 2011, the threshold was
increased up to 400,000 VND by “Decision No. 09/2011 / QD-TTg” for period of 2011 – 2015.
Table 2.1: Poverty threshold of Ministry of Labor, Invalid and Social Affairs in Vietnam
from 1998 to 2015. Unit: VND
1998-2000
2001-2005
2006-2010
2011-2015
Rural
70,000
100,000
200,000
400,000
Urban
80,000
150,000
260,000
500,000
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In other method, General Statistic Office uses the technique of World Bank to calculate
poverty threshold. This threshold is the amount of money required a month to ensure 2,230
calories a day per person and nonfood goods such as clothes, habitat, etc. This figure will be
modified after some years. In 2008, total income needed by a person to be not considered as
poor is 280,000 VND, increasing to 653,000 VND in 2010.
Table 2.2: Poverty threshold of General Statistic Office in Vietnam from 1998 to 2010 and
later. Unit: VND
Year
Threshold
1998
2000
2004
2006
2008
2010 to later
149,000
160,000
173,000
213,000
280,000
653,000
2.1.2 Concept and measurement of Multidimensional poverty
Multidimensional poverty is a broader concept compared to uni-dimensional poverty.
Decades ago, some studies (such as Sen et al., (1976); Sen et al., (1998); Boltvinik, (1998); etc.)
have laid a groundwork for multidimensional poverty concept, which is the deprivation of
various aspects in human life. A household might face the problem not only in monetary
aspect but also in many other health, education, information, etc. Boltvinik (1998) concluded
that a household might not monetary poverty but that household might get trouble with the
rest dimensions.
In a broader scale, according to United Nation Declaration (2008), the concept of poverty is
now extending. Poverty is now defined as the deprivation of nutrition, school attendance,
access to health care service, no productive asset and cannot access to credit. Moreover,
households considered poor have no rights and have a weak relationship to the community.
This new definition about poverty is more specific than only in income aspect compared to
the previous definition decades ago.
Hence, based on the declaration of United Nation and some recent studies, many policy
makers and researchers on over the world are now believe poverty is multidimensional issue.
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However, poverty is varying among countries and areas; it also depends on demographic,
geographic, religion and economy of each region.
Methods of multidimensional poverty measurement
Decades ago, the method of poverty measurement by one dimension is widely used, such as
monetary dimension (income or expenditure are indicators). However, this uni-dimension
method reveals the issue that the poverty status is just only reflected by monetary
deprivation status. Health, education, living standard, social capital, etc. is also important for
a live of everyone in the world. The idea that a person might have plenty of money but have
no health or relationship in the community is also considered as poor. Sen et al. (1976)
suggested the concept to solve this problem, which is the predecessor of multidimensional
poverty. Thirty years after, Alkire & Foster have announced a new method to calculate
poverty by a theory and concept of more than one dimension. The set of three dimension
include dimension of Health, dimension of Education and dimension of Living standard, which
will fully reflect the quality and status of a household.
There are some common dimensions used by many authors around the world, health,
education and living standard. Health is one of the most common dimension beside monetary
dimension because it is the key factor of increasing productivity. A country with high
productivity must be have a good population health. To estimate this dimension, many
authors used various indicators to represent for the status of a household or individual.
Salazar et al. (2013) used two indicators “Health insurance” and “Access to health service” to
represent for health status of a household. Dhongde and Haveman (2014) added the other
indicator called “Disability” to represent for any burden of a household member, which will
cause direct impact to finance and working productivity of household. In some developing
countries such as Latin American, a research done by Nawar (2014), who used mortality of
children as an indicator. This indicator is reasonable and significant in case of developing
countries, where health of children still not be fully care in poor household.
Education is similar to health in case of contribution to productivity, hence there are
numerous indicators used by authors. There are some common indicators: “Adult literacy”,
“Year of schooling”, “Child education”, etc. These indicators are used by many authors
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estimate the status of education (Salazar et al., 2013; Nawar, 2014). Living standard is
considered as one dimension in many researches, for example, Vijaya et al. (2013) used some
indicators to represent for this dimension, electricity, cooking fuel, water source, asset of
household. These indicators will draw a full picture of household living condition. A
deprivation in these indicators is the status of low living condition. However, these indicators
might various among researches because of the variety of religion, living standard and
geography.
Alkire & Foster approach
Nowadays, this method is widely used in various countries and institutions on over the world.
Arguing that poverty is not a problem of monetary deprivation but also many other issues,
hence there are many dimensions and indicators were published to estimate poverty. The
most prominent is the set of Alkire et al. (2014) with three dimensions including education,
health and living standard that are proxied by 10 indicators.
Figure 2.1: Theory framework of Alkire & partners (2014).
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