Rural development policies in Southeast Asia

impacts on household livelihoods, welfare and rural transformation

authored by

Manh Hung Do

supervised by

Ulrike Grote

Abstract

Structural change in agriculture is an essential part of economic development in developing countries. The process of structural change is characterized by the shift of labor from agriculture to non-agriculture sectors which leads to higher income from non-farm sources. Within the agricultural sector, structural change can influence the application of mechanization and improve income from farm sources of households who remain in the sector. In developing countries, agriculture plays a significant role in rural households’ livelihoods, hence, structural change can also be considered as agricultural transformation or rural transformation. Studying how rural development policies, for instance promoting investments in rural infrastructure, can accompany the structural change is vital for a successful transformation of agriculture and rural areas. Vietnam is a good example to study rural development policies and structural change. First, this country is famous for its rapid economic growth, but a large proportion of the country’s population live in rural areas and rely on agriculture as the main income source. Second, the country has officially introduced a new rural development (NRD) policy since 2010 to solve critical issues in rural areas. In 2022, the government of Vietnam extended this national program for the next phase, up to 2025. Hence, the question arises whether the past investments are significant for improving rural households’ income and welfare. Finally, the rural population in this country is even more vulnerable due to extreme weather events and health shocks. Therefore, this dissertation aims to provide empirical evidence on how this NRD policy can help increase rural households’ income, improve their welfare and resilience against shocks, and reduce poverty, while accelerating structural transformation in rural areas. If investments in rural infrastructure can help solve critical problems in rural areas, this dissertation also aims to shed light on which areas of the rural investments and policy improvements should be implemented in the future. The main data used in all papers of this dissertation come from the Thailand – Vietnam Socio-Economic Panel (TVSEP). The first paper of this dissertation answers how improvements in rural infrastructure and income contribute to the enhancement of rural households’ resilience in the context of shocks. The second paper investigates whether non-farm employment opportunities can reduce the exploitation of natural extraction and poverty in rural areas. The results show that the development of rural infrastructure under the NRD program can help increase rural households’ absorptive and adaptive capacities against shocks and reduce poverty in absolute, relative, and multidimensional terms. Better rural infrastructure also helps provide better non-farm employment opportunities which contribute to the reduction of natural resource extraction and poverty. The third and fourth paper focus on potential policy improvements which can jointly increase rural households’ income and stimulate structural change in rural areas. The results indicate that interventions in facilitating land consolidation and promoting agricultural commercialization can stimulate structural change and reduce poverty and inequality. The fifth and sixth paper point out that rural investments can place more emphasis on ensuring year-round irrigation and improving infrastructure for information and communication technology (ICT) (i.e., the internet connectivity). These improvements can help increase welfare and reduce poverty among people in rural areas and disadvantaged groups such as female migrants. In addition to contributing to the literature in terms of empirical evidence, this dissertation also contributes to the literature in two methodological aspects. First, this study addresses the simultaneity of (i) non-farm income and income from natural extraction in the second paper, (ii) farming efficiency and participation in land consolidation in the third paper, and (iii) crop commercialization and mechanization in the fourth paper. Second, this study accounts for selection bias, unobservable factors, endogeneity concerns in all of papers by using panel data and appropriate econometric approaches. Based on the empirical evidence on how household capital and village conditions, especially infrastructure development, can improve rural household resilience capacities, increase income, mitigate the effects of shocks, reduce poverty, and ultimately promote structural change in Vietnam and Southeast Asia in general, several policy implications are proposed to promote structural transformation.

Organisation(s)

Institute of Environmental Economics and World Trade

Type

Doctoral thesis

No. of pages

58

Publication date

09.10.2024

Publication status

Published

Sustainable Development Goals

SDG 10 - Reduced Inequalities

Electronic version(s)

https://doi.org/10.15488/17998 (Access: Open)