BỘ GIÁO DỤC VÀ ĐÀO TẠO TRƯỜNG ĐẠI HỌC KINH TẾ Tp. SOUK SOPHAL URBAN EXPANSION THE EFFECT OF ECONOMIC GROWTH ON URBANIZATION IN VIETNAM LUẬN VĂN THẠC SĨ KINH TẾ TP. Hồ Chí Minh-Năm 2013 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com BỘ GIÁO DỤC VÀ ĐÀO TẠO TRƯỜNG ĐẠI HỌC KINH TẾ Tp. SOUK SOPHAL URBAN EXPANSION THE EFFECT OF ECONOMIC GROWTH ON URBANIZATION IN VIETNAM Chuyên ngành: Kinh tế phát triển Mã số: 60310105 LUẬN VĂN THẠC SĨ KINH TẾ NGƯỜI HƯỚNG DẪN KHOA HỌC: Dr.
Nguyễn Lưu Bảo Đoan TP. Hồ Chí Minh-Năm 2013 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENTS Firstly, I would like to take this opportunity to thanks my Advisor Dr. Nguyễn Lưu Bảo Đoan for his guidance during the process of researching and writing this thesis. He was supportive of helping me to successfully complete this thesis.
It would not have been possibly written without his help. I am very fortunate to have him as my master’s thesis supervisor. I would also like to express my profound thanks to Dr.Pham Khanh Nam for his help in collecting Vietnam data. Special thanks to Dr.Nguyen Huu Dung, Deputy Dean at the University of Economics HoChiMinh City.
I would like to thanks my family and my good friends for always encouraging me to think and supporting me spiritually throughout my life. Finally, I would like to dedicate this work to my lost relatives and I hope that this work makes them proud. HoChiMinh City, December 15, 2013 SOUK SOPHAL i LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Abstract Urbanization is a major change taking place globally, especially in Southeast Asia which is one of the world’s fast growing regions in terms of population and urban growth. The total population in Southeast Asia accounts for 14.64 per cents of Asia’s population.
Meanwhile, urbanization is also increasingly taking place in many cities in Southeast Asia. Phnom Penh is the capital of Cambodia with an estimated population of 2.3 million by 2013, with the area of 678. Recently, the development in the economy has impacts on the growth of Phnom Penh Capital. The demand for more living spaces has increased so it lead to unplanned urbanization and industrialization in the outer periphery of Phnom Penh Capital, which, has created pressure on the change in land use pattern.
Therefore, it is important to study impacts of different factors on urban expansion. However, the absence of data for Phnom Penh does not make a regression analysis possible. Thus, the study employs available data of cities and provinces in Vietnam, a country which has a similar economic structure and level of development. In this paper, the overall goals are to examine the change in population, GDP, agricultural investment and other that lead to the urban spatial growth and, the expansion of urbanized areas.
Based on the Monocentric model and panel analysis, the result shows that population, agricultural investment, industrialization and GDP are major pushing factors in the processing of urban expansion. The analysis demonstrates the overwhelming importance of economic growth in the determination of urban land use. This study examines the effect of economic growth on urbanization in Vietnam. Based on this information, a case study analysis of Cambodia and Phnom Penh is also conducted.
Keywords: economic growth, monocentric model, urban expansion, land use ii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Table of Contents ACKNOWLEDGEMENTS. ii LIST OF ABBREVIATION LIST OF TABLES LIST OF FIGURES Chapter 1 : Introduction…………………………………………………………….4 Scope and Methodology of Research……………………………………3 1.5 Research Structure ………………………………………………………3 Chapter 2: Urbanization in Vietnam……………………………………………….1 The overview of the study area………………………………………….2 Urbanization in Vietnam………………………………………………….7 Chapter 3: Literature Review…………………………………………………….1 Theoretical Literature Review of Monocentric…………………………12 3.2 The Monocentric model……………………………………………….4 Analytic Framework……………………………………………………19 Chapter 4: Data and Methodology……………………………………………….24 Chapter 5: Result and Discussion…………………………………………………26 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.33 Chapter 6: A Case Study about Cambodia and Phnom Penh …………………….1 Overview of urbanization in Cambodia……………………………….2 Overview of urbanization in Phnom Penh………………………………40 Chapter 7: Discussion 7.1 Explaination of differences between theory and my analysis….2 Limitations of this analysis…………………………………….48 REFERENCES APPENDIX LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF ABBREVIATION CBD Central Business District FEM Fixed Effect Model GDP Gross Domestic Product GSO General Statistics Office IND Industrialization SVS Service Sector REM Random Effect Model LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF TABLES Table 3.1 The proxies and list studies of independent variables………………….2 Correlation test…………………………………………………………26 Table 5.3 Multicolinearity test……………………………………………………27 Table 5.1 Heteroskedasticity test…………………………………………………33 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Figure 2.1 Expansion of city boundaries between 1999 and 2009 .2 Urbanization rate 1960-2010…………………………………………8 Figure 3.1 PLUREL concept of peri-urban areas and rural- region…………….2 Dimension of regional urban form.5 Graph of changes in urbanized land across the country………….6 Graph of explanation for changes of province &cities.1 Phnom Penh map by districts………………………………………….2 Planning of city development………………….41 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CHAPTER 1: INTRODUCTION 1.1 Research problem One of the most remarkable changes over the centuries is urbanization, or the shift from rural areas to large cities. Urbanization has had important consequences in many aspects of social, political, and economic life (Kleniewski & Thomas, 2011) Kleniewski, N. The world remained largely rural until the industrialization of the nineteenth century.
Urbanization is a major change taking place globally, especially in Southeast Asia. Between the 1870s and World War II, a few dominant Southeast Asian urban centers such as Yangoon (Myanmar), Malaya (Singapore), Bangkok (Thailand), Saigon (Vietnam) and Manila (Philippines) were ports of Western and the gateways that connected the frontier southeast Asia to the global economy (Gregg Huff, 2012). The study of urbanization is very necessary for developing countries because these countries are in the process of facing with rapid urbanization. Urbanization is the process which leads to a higher proportion of total population of an area living in cities and towns and generally occurs with modernization and industrialization.
Moreover, modernization and industrialization pull people to cities at the same time that they push people from rural home. And when more and more people leave villages and farms to live in cities, it is the results of urban growth. According to experiences of most part of the world, urbanization is part of the development process. Rapid urbanization is closely linked to economic development that is contributed with the rising demand of land in manufacturing and service sector in urban and the decline of agricultural land in rural.
Urbanization occurs as countries shift from rural agricultural activities into urban industrial activities. Successful urbanization requires the expansion of the industrial and service sector (Parker, 1996). Similarly, urban expansion mainly depends upon the urban requirement, facilities available and industrialization. The development of cities plays a very important role in economic development in developing countries.
The major dynamic driving forces of cities in developing countries are economic and social 1 http://2012books.org/books/a-primer-on-social-problems/s17-01-a-brief-history-of- urbanizatio.html 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com forces (population growth and urbanization) that change the urban system. Of course, the problems are different and unique from one to another urban according to the urban growth patterns, economic and social characteristics. With high urban population density and potential for economic growth, there are demands more and more land to ,support, yet, there is no unlimited amount of land for growth. The increase of demand for goods and services of all kinds is pushing up the price especially the price of land.
Urban growth is the growth and decline of urban areas when an economic phenomenon is inextricably linked with the process of urbanization. Urban growth or city growth is the expansion of towns and cities with respect to the increase of the size of a built-up area. Cities offer important opportunities for economic and social development and are they are the focal points for economic growth, innovation, and employment. Nevertheless, as cities grow, managing them becomes increasingly complex.
As a result, it creates pressure on infrastructure, reduction in farmland, and damage to natural environment and changes in diversity use of land in particular area. Particular concerns are the risks to the immediate and surrounding environment, to natural resources, to health conditions, to social cohesion, and to individual rights. Since an urban land is very often being developed at the cost of a lot of arable lands that would raise many people, if there is no enough arable land to supply enough food, it would threat to human being’s surviving. It is also known that demography and economy are two driving factors for urban expansion.
Demands for space by humans are the original force for urban expansion. However, the urban expansion may not happen without economic support. High economic growth may also promote the demands. Therefore, the link between urban expansion and economic growth is equivalent and very closely.1 General Objective To examine the effect of economic growth on urbanization 1.2 Specific Objective (i) To examine whether or not the GDP growth cause urban expansion and its magnitude (ii) To examine whether or not the population growth causes urban expansion and its magnitude 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com (iii) To examine whether or not the agricultural investment causes urban expansion and its magnitude (iv) To examine whether or not the industrialization causes urban expansion and its magnitude (v) To examine whether or not the service sector causes urban expansion and its magnitude 1.1 Research Question What are the effects of economic growth on urban expansion? 1.2 Specific Question (i) Does GDP growth rate have effect on urban expansion? (ii) Does population growth have effect on urban expansion? (iii) Does agricultural investment have effect on urban expansion? (iv) Does industrialization have effect on urban expansion? (v) Does service sector have effect on urban expansion? 1.4 Scope and Methodology of Research The thesis will be examine on 63 cities and provinces in Vietnam except some provinces such as Hoa Binh, Hau Giang and Lai Chau because of missing data, during 2000-2011 period.
In order to get the goal of this research that can explore the effect of economic growth on urbanization (urban expansion), the STATA 12 software will be apply to analyze the panel dataset. Particularly, the specific econometrics consists of Fixed Effects Model (FEM) and Random Effect Model (REM) but in my analysis I only use Fixed Effects Model. Several statistics tests are also taken into account in order to find the most suitable model that can explain the best effect of economic growth on urbanization.5 Research Structure This thesis is organized into eight chapters and reference and appendix as follow. Chapter 1 (Introduction) draws a general scope of this research.
Chapter 2 (Urbanization in Vietnam) covers the urbanization underway and some government policies on urbanization. Chapter 3 (Literature review) summarizes the theory of Monocentric model and empirical studies of economic growth and urban expansion in cities and provinces in Vietnam. Chapter 4 (Data and Research methodology) 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com illustrates the data source, data description, research method, method for analysis and descriptive analysis. Chapter 5 (Empirical Results) shows the estimated result on this research study.
Chapter 6 (A case study of Cambodia and Phnom Penh urbanization) shortly reviews urban planning, government policy on housing and some policies on urbanization. Chapter 7 (Discussion) explains the differences between theory and my analysis and finally the limitation of this analysis. Chapter 8 (Conclusion) evaluates the empirical study and recommends some policies. 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CHATER 2: URBANIZATION IN VIETNAM 2.1 The overview of the study area Vietnam is a developing country located in the centre of the Southeast Asian region.
It borders the Gulf of Thailand, Gulf of Tonkin, and South China Sea, alongside China, Laos, and Cambodia. This S-shaped country has a north-to-south distance of 1,650kilometers and about 50 kilometers wide at the narrowest point 2.Vietnam is a development success story.