UNIVERSITY OF ECONOMICS HOCHIMINH CITY VIETNAM –NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS MULTIDIMENSIONAL POVERTY IN MEKONG RIVER DELTA By NGUYEN THI LAN ANH Ho Chi Minh, April 2014 123doc UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES HO CHI MINH CITY THE HAGUE VIETNAM THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M. IN DEVELOPMENT ECONOMICS MULTIDIMENSIONAL POVERTY IN MEKONG RIVER DELTA A thesis submitted in partial fulfillment of the requirements for the degree of Master of Arts in Development Economics By NGUYEN THI LAN ANH Academic supervisor Dr. NGUYEN HUU DUNG Ho Chi Minh City, April, 2014 123doc DECLARATION I declare that "Multidimensional poverty in Mekong River Delta” is my own work; it has not been submitted to any degree at other universities. I confirm that I have made by effort and applied all knowledge for finishing this thesis in the best way.
Ho Chi Minh City, April 2014 NGUYEN THI LAN ANH i 123doc ACKNOWLEDGEMENTS First of all, I would like to express our deepest gratitude to my supervisor, Dr. Nguyen Huu Dung for his invaluable comments, suggestions and engagement through the learning process of the thesis. I would also like to thank Dr Pham Khanh Nam for helpful remarks on my TRD. Then I am much obliged to Dr.Tran Tien Khai and Dr.
Truong Dang Thuy for their enthusiasm which has encouraged me a lot to complete my dissertation. I would also like to thank my Research Methodology module lecturer Dr. Luca Tasciotti and Assoc. Nguyen Trong Hoai who provided me with the background knowledge of research implementation.
It is no doubt that I am deeply indebted to my family members for all the kind understanding and spiritual support. Finally, I would like to dedicate my concluding words to all class-mate who involved in this study. ii 123doc ABSTRACT The study provides a critical review of poverty measurement in Mekong River Delta and arguments for utilizing a recent multi-dimensional methodology framework. By applying Alkire & Foster’s methodology for Vietnamese Households Living Standards Survey data 2010 (VHLSS 2010), it produces a multidimensional poverty estimation of Mekong River Delta at the aggregate level, provincial level and identify the biggest contributors to multidimensional poverty.
Twelve indicators corresponding to four dimensions are considered for estimation. The study also works out how policy-makers can prioritize the budget spending among provinces and within each province based on decomposable property of adjusted headcount ratio. Lastly, the study investigates the effectiveness of using uni-dimension, per capita consumption, in poverty measurement and reaching a conclusion that consumption alone cannot capture deprivation experienced by the poor households. Key words: Multidimensional poverty measurement, Deprivation, Alkire & Foster Methodology, Mekong River Delta.
iii 123doc TABLE OF CONTENTS DECLARATION. iii TABLE OF CONTENTS. iv LIST OF TABLES. vii LIST OF FIGURES.
viii Chapter 1 INTRODUCTION. Justification of the study. Organization of the research study .3 Chapter 2 LITERATURE REVIEW. Key concepts of multidimensional poverty.
Economic theories of poverty. Approaches to poverty measurement. Non-monetary approach. Reviews of empirical studies.
Empirical literature summary. Problems and limitations of previous studies. An overview of poverty in Vietnam and Mekong River Delta. Frequently used indicators of poverty measurement.
Multidimensional poverty index of Alkire and Foster. Choice of dimensions, indicators and deprivation cut off. Application of Weights. Treatment of non-applicable population and missing data.
Treatment of non-applicable population. Treatment of missing data. “Across dimension” cut-off and MPI estimation. Poverty estimates at provincial level.
Which indicator contributes the most to MPI?. Decomposition of adjusted headcount ratio and Policy implications. Comparison between Consumption poverty and Multidimensional poverty. Income poverty verses Multi-dimesional poverty.
Correspondence of consumption poverty and multidimensional poverty. Correlation between Consumption and Multidimensional poverty. Limitation and further researches .55 vi 123doc LIST OF TABLES Table 2.1: GSO – WB poverty lines .2 MOLISA poverty lines .3:Summary of empirical studies relating to multidimensional poverty .1: Households surveyed in each province.2: Dimensions, Indicators and cutoffs .3: Weights assigned to dimensions and indicators .1: Multidimensional poverty estimate on various cut off point .2: Poverty estimates at provincial level .3: Spearman correlation between Mo ranks by different k values .4: Decomposing of adjusted headcount ratio by indicator .5: Comparing monetary poor and multidimensional poor at aggregate level.6: Spearman coefficient between indicators. 50 LIST OF FIGURES Figure 2.1: Dimensions and indicators of the MPI ( by Alkire and Foster, 2010) .2: Dimensions and indicators of the MPI (by Cuong Nguyen, 2012) .3: Ten dimensions with 16 indicators representative for four livelihood assets (by Khai Tran & Danh Nguyen, 2012) .1: Comparison percentage of households deprived in each indicator .2: Proportion of households deprived in each indicators .3: Proportion of household deprived in various numbers of indicators .4: Contribution by province of each dimension to MPI .5: Contribution to MPI by indicators at aggregate level .6: MPI compare to consumption poverty by provincial level.
50 vii 123doc ACRONYMS GSO General Statistics Office HHP Household Prestige index HDI Human Development Index MDG Millennium Development Goal MPI Multidimensional Poverty Index VHLSS Vietnam Household Living Standard Survey MRD Mekong River Delta MOLISA Ministry of Labor, Invalids and Social Affairs viii 123doc Chapter 1 INTRODUCTION 1. Problem statement Our life is better but poverty is still knocking at the door, from the world’s wealthiest nations to the poorest. According to Human Development report (March 2012), nearly a haft the world, or about three billion, are still living on less than 2USD a day; 1.1 billion people in developing countries with inadequate access to water; 800 million people in the world suffer from hunger and malnutrition; among 2.2 billion children, close to haft of children live in poverty, 15 million children die each year from hunger, 1.4 children die every year from lack of access to safe drinking water and adequate sanitary. These unexpected deprivations have severely existed in many countries over centuries.
Facing with this situation, an issue of how to define the poor has been increasingly concerned by economists during the past decades. Conventionally, poverty is defined and measured in money term but poverty definitely goes far beyond the monetary deprivation. During recent decades, poverty has been described as a multidimensional phenomenon due to the fact that people may suffer deprivation in many other aspects of life rather than income. For that reason, many alternative approaches to measuring and conceptualizing poverty have been explored to reflect its nature, such as Household prestige score HHP (Rossi, 1974), Human Development Index HDI (UNDP, 1990), the Human Poverty Index (UN, 1997), household asset index (Filmer and Prichett, 1998, Booysen et al 2007)….
Such approaches encompassed almost aspects of human life like asset ownership, health, education, security, living standard etc. Remarkably, multidimensional poverty index developed by Sabina Alkire and James Foster in 2010 which covers deprivation in various social-economic aspects of human being is widely accepted and internationally used during recent years. Keeping in view international as well as national demand of addressing the poverty through multiple dimensions of deprivation, this paper chooses Mekong River Delta to study poverty in wider and deeper sense through various dimensions. The study aims at mapping and measuring of multidimensional poverty in rural areas of Mekong River Delta by estimating incidence and depth of poverty across provinces through multidimensional poverty index (MPI) developed by Alkire and Foster in 2010.
Based on research findings of these, some policy implications will be 1 123doc discussed and suggested to alleviate efficiently poverty in each province from the multidimensional perspectives. To measure the state of multidimensional poverty by provinces in rural of Mekong River Delta. To find out which deprivation contribute the most to overall poverty and provincial poverty. To compare between monetary poor and multidimensional poor indexes iv.
To propose some necessary/appropriate interventions for alleviating poverty. How width and depth of multidimensional poverty in Mekong River Delta? ii. Which deprivation contributes the most to multidimensional poverty at aggregated level and provincial level among rural areas of the Mekong River Delta? iii. How difference can be between consumption poor and multidimensional poor indexes? iv.
Can consumption alone measure poverty experienced by households? 1. Multidimensional poverty is severe in Mekong River Delta ii. Deprivation in per capita consumption, sanitation, cultivated land and housing quality contributes the most to rural multidimensional poverty. The poverty rate is much higher in multidimensional poverty than consumption poverty.
Consumption alone cannot measure poverty experienced by households. Justification of the study Given the absence of research on rural poverty in multidimensional sense in Vietnam, this type of research is necessary. The study tries to discover the state of multidimensional poverty in rural of Mekong River Delta by using Alkire and Foster methodology and find out which indicator impacts the most to overall MPI. Result of study is informative and useful for rural policy maker in determining scope and aspects which need to be addressed to alleviate poverty and, on that basis, they propose some recommendations on investigation or relief to improve rural living standards in Mekong River Delta.
Organization of the research study The rest of this study is organized as follows. Chapter two introduces some key concepts of multidimensional poverty, some economic theories, a review of literature and relevant research associated with multidimensional poverty. In addition to a review of literature, chapter two also presents the conceptual framework and builds on an analytical framework to capture multi aspects of poverty. Chapter three elaborates on the data and methodology for multidimensional poverty measurement.
Chapter four reflects data analysis and result presentation. Chapter five concludes with research’s discussion, recommendation for practice and direction for further researches. 3 123doc Chapter 2 LITERATURE REVIEW This chapter begins by describing some key concepts of poverty which have been developed over time. Economic theories of poverty are then highlighted (section 2) and brief overview of approaches to measure poverty in Mekong River Delta is provided (section 3).
Some empirical studies are then presented (section 4). The conceptual framework for multidimensional deprivation is defined (section 5) and analytical framework to construct multidimensional poverty index is outlined (section 6). Key concepts of multidimensional poverty 2. Poverty For poverty, two of the most typical definitions accepted world-wide are from United Nations and the World Bank.
The United Nations measures poverty by various attributes that contribute to human well-being. The United Nations states that: “Fundamentally, poverty is a denial of choices and opportunities, a violation of human dignity. It means lack of basic capacity to participate effectively in society. It means not having enough to feed and cloth a family, not having a school or clinic to go to; not having the land on which to grow one’s food or a job to earn one’s living, not having access to credit.
It means insecurity, powerlessness and exclusion of individuals, households and communities. It means susceptibility to violence, and it often implies living on marginal or fragile environments, without access to clean water or sanitation“(United Nations, 1998) Similarly, another multi-dimensional poverty definition which is widely used is the one from World Bank: ”Poverty is pronounced deprivation in well-being, and comprises many dimensions. It includes low incomes and the inability to acquire the basic goods and services necessary for survival with dignity. Poverty also encompasses low levels of health and education, poor access to clean water and sanitation, inadequate physical security, lack of voice, and insufficient capacity and opportunity to better one’s life.
4 123doc Besides, in the paper in 2009, Alkire and Foster defined multidimensional poverty as: “A multidimensional poor person who is if and only if having both 16 economically deprived and socially deprived. A person is economically deprived if the person’s income falls below the income cutoff as a shortfall in the space of income (consumption, wealth). A person is socially deprived if any social achievement falls below its respective cutoff.