Determinants of households in come in planned areas A case of My Phuoc down toawn - Ben Cat - Binh Duong Luận văn thạc sĩ

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
DETERMINANTS
OF
HOUSEHOLDS'
INCOME
IN
PLANNED AREAS: A CASE
OF
MY
PHUOC

DOWNTOWN-
BEN
CAT
DISTRICT-
BINH
DUONG
A thesis submitted in partial fulfilment
of
the requirements for the degree
of
MASTER OF ARTS IN DEVELOPMENT ECONOMICS
By
THAI
THANH PHONG
,
so
G1i0ovc

·-
1
TRIJONG
HQC
KINH
TE
TP.HCM
I
TIIV
YVII1.r\T
I
) 1 1-i1 I

HO
CHI
MINH
CITY,
OCTOBER
2009
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

DETERMINANTS
OF
HOUSEHOLDS'
INCOME
IN
PLANNED
AREAS: A CASE
OF
MY
PHUOC
DOWNTOWN-
BEN CAT
DISTRICT-
BINH
DUONG
A thesis submitted in partial fulfilment
of
the requirements for the degree
of
MASTER OF ARTS IN DEVELOPMENT ECONOMICS
Academic Supervisor: DR.
HA
THUC
VIEN
Student:
THAI
THANH
PHONG
HO
CHI

MINH
CITY,
OCTOBER
2009
Acknowledgements
In the first
of
all, my heartfelt thank goes
to
my supervisor, Dr. Ha Thuc Vien.
His comments and suggestions on my term paper for Rural Development course
helped me to form my research topic. During the course
of
my thesis research and
writing, I have received numerously his kind supervision, guidance, useful comments
and encouragements. My deepest thanks also
go
to Associate Professor Dr. Nguyen
Trong Hoai, Co- Director
of
Vietnam - The Netherlands Programme for M.A. in
Development Economics, who has always given me his encouragements and kindly
during the course
of
my study and thesis research. My thanks also
go
to my kindly
and enthusiastic classmate, Mr Nguyen Ngoc Danh, who is always ready to instruct
me while I am processing and analyzing to my data with STAT A 9
.1.

My thesis was made possible with co-operation and supports
of
local people in
of
My Phuoc downtown who kindly provided
me
useful information and ideas related
to my research. I am grateful to
My
Phuoc downtown and Ben Cat district People's
Committee, especially to Mrs. Thuy who gave me many information which included
important data; Mr Tuan in ward
2,
Mr Chau in Ward
3,
Ms Hoa in ward 4
who
took
and introduced me with local people during time conducting my fieldwork. I would
also like to present many thanks to my cousin and my friends, who helped
me
to
approach project documents
of
My
Phuoc IPs.
I am grateful to my manager in Binh Duong Telecommunication, Mrs Huong,
who created advantage condition
in
job let I had time to survey during two month.

My heartfelt gratitude also goes
to
my wife, Ha and two girls, Nha and Thanh, who
are my love and motivation during the studying time.
Determinants
of
Households' Income in Planned Areas
DECLARATION
I declare that
"Determinants
of
Households'
Income
in
Planned
Areas: A
Case
of
My
Phuoc
Downtown
- Ben
Cat
District -
Binh
Duong
Province"
is my
own work, that it has not been submitted to any degree or examination at any other
universities, and that all the sources used or quoted are indicated and acknowledged

by complete references.
HCMC,
October 2009
THAI
THANH
PHONG
MDE-
Class 13
11
Determinants
of
Households' Income
in
Planned Areas
Abstract
This study aims to investigate the impacts
of
land recovery for industrial and
urban development on displaced people's livelihoods those who are living in
industrial and urban planed areas in Binh Duong
Province through a case study
of
My
Phuoc Downtown. A main approach
of
this study
is
based Sustainable Livelihood
Framework developed by DFID
(2001). A combination

of
qualitative and quantitative
methods was employed throughout the research process, from the early stage to the
data analysis stage to describe livelihood patterns
of
surveyed households before and
after displacement and to analyze statistically factors affecting their income. More
specifically, econometrics models were applied to estimate the role
of
livelihood
assets on livelihood outcome
of
displaced households.
Quantitatively, linear regression model was applied to estimate the impacts
of
household livelihood assets, compensation (both in kind and in cash) on household
income. The estimation results show that there
is
positive impact
of
livelihood assets
on livelihood outcome (total household income) before the displacement at a
1%
significant level (wage and saving) and at a 5% significant level (farmland and
residential land). After resettlement, estimating results
of
simultaneous equations
model with three-stage least-squares estimation method inform that compensated
money, compensated residential land and accessed credit volume has positively
determined the total investment for livelihood rehabilitation at 1% significant level. In

addition, a number
of
resettled housing land transfer times are positive effect
(significantly at a 5% level) to household's total livelihood investment. Together with
investment for livelihood rehabilitation, total expenditure on children education after
resettlement also has positive impact with total household's income after resettlement
at a
5%
significant level. Proxy indicators
of
livelihood assets are positively and
significantly related with total income after resettlement such
as:
education
of
household head (at a
5%
level), a number
of
working member in household (at a
1%
level); a number
of
cell phone in a household (at a
1%
level); a number
of
meeting
time per year (at a
1%

level) and financial savings and livestock value before the
displacement (at a 5% level).
Moreover, the study found that, most displaced households
do
not receive any
priority in vocation trainings, credit for alternative livelihood development and tax
MDE-
Class 13
lll
Determinants
of
Households' Income
in
Planned Areas
exemplification programs from local government and urban development project
investors although displaced people are often promised by authorities and investors at
the beginning
ofthe
project initiation.
Keywords: Livelihood, industrialization, land recovery, compensation,
resettlement.
MDE-
Class 13
IV
Determinants
of
Households' Income in Planned Areas
Contents
Acknowledgements i
Abstract iii

Contents v
List
of
Tables vii
List
of
Figures viii
Chapter
1 1
1. Introduction 1
1.1. Problem statement 1
1.2. Objectives
ofthe
study 3
1.3. Research questions 4
1.4. Outline
of
the thesis 4
Chapter II 6
2. Literature
Review
6
2.1 Definitions and terminologies 6
2.1.1 Land ownership 6
2.1.2 Land allocation 6
2.1.3 Land use rights 6
2.1.4 Land price 7
2.1.5 Land recovery and resettlement 7
2.1.6 Livelihoods 8
2.2 Empirical studies

of
land recovery, resettlement and its impacts
on
displaced farm households' livelihoods 8
Chapter
III
12
3. Research
Methodology
12
3 .1. Analytical framework
of
the study
12
3.2. Econometric framework
ofthe
study
14
3.3. Variables definition
16
3 .4. Data collection and analysis
18
3.3
.1
Selection
of
study site
18
3.3 .2 Unit
of

analysis
19
3.3
.3
Data sources and collection techniques 19
3.3.4
Data· analysis 20
Chapter
IV

22
4. Description
of
Study
Area 22
MDE-
Class 13
v
Determinants
of
Households' Income in Planned Areas
4.1
Industrialization progress
ofBinh
Duong province 22
4.2 Background
of
study site (My Phuoc downtown) 22
4.3 Regulations
of

Vietnam on land recovery and resettlement 24
4.4 Regulations
of
land recovery and resettlement
of
My Phuoc Industrial
Park project
25
4.5 The implementation
of
policies
of
land recovery and resettlement in My
Phuoc downtown 27
Chapter V
32
5. Displaced Households' Livelihoods 32
5.1
Household's livelihood patterns
32
5.1.1 Households' livelihood patterns before land recovery (Year 2000) 32
5.1.2 Patterns
of
household's livelihood right after resettlement
33
5.1.3 Current patterns
of
households' livelihood 37
5.2 Compensation and compensation using
.41

5.2.1 Compensation
41
5.2.2 Compensation using
44
5.3
Livelihood Assets
51
5.3.1 Natural Capital
51
5.3.2 Physical capital
52
5.3.3 Financial Capital
54
5.3.4 Social Capital
56
5.3.5 Human capital
58
5.4 Households' expenses
61
5.5 Household's income
61
5.5.1 Income sources and income calculation method
61
5.5.2 Trends in household income
63
5.6 Results
ofthe
econometric analysis
67
5.6.1 Determinants

of
households' income before the planning 67
5.6.2 Determinants
of
households' income after resettlement
68
Chapter
VI
73
6. Conclusions 73
6.1
Conclusion and recommendations
73
6.2 Research limitation
75
References 76
Appendices 82
Appendix
A:
Variables definition
82
Appendix
B:
Aggregated income model before the planning (Year 2000)
83
Appendix
C:
Aggregated Income Model after the Resettlement (Year 2008)
83
Appendix

D:
Questionnaires
85
MDE-
Class 13
Vl
Determinants
of
Households' Income
in
Planned Areas
List
of
Tables
Table
3-1
: Variable definition
17
Table 4-1: Summary
of
compensation following regulations
25
Table 4-2: Summary
of
compensation in My Phuoc Industrial Park 27
Table 4-3:
Policies
of
compensation and resettlement
31

Table
5-l:
Patterns
of
Livelihood before the Planning 32
Table 5-2:
Patterns oflivelihood activity combination before the planning
33
Table 5-3: Patterns
of
household's livelihood activities after land recovery and
resettlement 36
Table 5-4: Number kinds oflivelihood after displacement and resettlement 37
Table 5-5: Current patterns
of
households' livelihoods 39
Table 5-6: Current patterns
of
household livelihood activity combination 40
Table 5-7: Vary in cash compensation among households
.42
Table 5-8: Classification
of
household's cash compensation 42
Table 5-9: Vary in household's land compensation
43
Table 5-l
0:
Classification
of

household's land compensation by area .43
Table 5-11: Cash compensation expenses 44
Table 5-12: Detail
of
property investment from cash compensation .45
Table 5-13: Household's investment in education 46
Table 5-14:
Using compensated/resettled residential land 47
Table 5-15: A number
oftimes
to transfer compensated land
.47
Table 5-16: Reasons
of
sale compensated/resettled residentialland 48
Table 5-17:
Other income sources
of
displaced household 48
Table 5-18: Balance
of
compensation expenses 49
Table 5-19: Detail
of
household finance deficit 49
Table
5-20: Finance sources to cover deficit 49
Table 5-21: Surplus
of
compensation after expenses 50

Table 5-22: Land area
of
observed households before the planning and at the present

51
Table 5-23: Classification
of
household's house types before the planning
53
Table 5-24: Public service access by households before the planning
53
Table 5-25: Price
of
one kilowatt
of
electrical power 54
Table 5-26: Types
of
constructed house at the present 54
Table 5-27: Area
of
house before the planning/at the present 54
Table 5-28: Average distance to public service systems 54
Table 5-29: Saving and livestock value
of
household before the planning/at the
present
55
Table 5-30: Household's loan access before the planning/at the present
55

Table 5-31: Household's loan sources before the planning/at the present
55
Table 5-32: Loan using before the planning 56
Table 5-33: Loan using at the present 56
Table 5-34: Friendly level
of
neighbours 57
Table 5-35: Security condition level 57
Table 5-36: Social environment before the planning/at the present 57
Table 5-37: Organizations/Associations before the planning/at the present 58
Table 5-38: Member
of
social organizations before the planning/at the present
58
Table 5-39: Age
of
household head in the sample at the present 59
MDE-
Class 13
Vll
Determinants
of
Households' Income
in
Planned Areas
Table 5-40: Classification
of
average age
of
household members at the present 59

Table 5-41: Household size 59
Table 5-42: Average education
of
household members at the present 59
Table 5-43: Education in observed households at the present
60
Table 5-44: Composition
of
household at the present 60
Table 5-45: Annual expenses
of
households before the planning/at the present
61
Table 5-46: Detail
of
annual expense before the planning/at the present
61
Table 5-47: Comparison
of
household annual expenses
61
Table 5-48: Income sources
of
surveyed households
63
Table 5-49: Annual farm-based income before the planning/after displacement/at the
present 64
Table
5-50: Household aggregated income
65

Table 5-51: Trends in proportion
of
farm-based income
65
Table 5-52: Household's non-farm income before the planning/after resettlement /at
the present 66
Table 5-53: Descriptive statistics
of
proxy variables before the planning
68
Table 5-54: Regression results
of
econometric model before the planning
68
Table 5-55: Descriptive statistics ofproxier variables after resettlement 70
Table 5-56: Regression results
of
econometric model after resettlement
71
List
of
Figures
Figure 3-1: Conceptual framework for the empirical study
12
Figure 4-1: Administrative map
of
Ben Cat district
23
Figure 4-2: Location map
of

My Phuoc downtown
23
Figure 4-3: Double market (Chq Doi) 28
Figure 4-4: Silent professional school in My
Phuoc IP 29
Figure 5-1: Resettled house border with the cattle cage
of
Uncle Pham Van Hai 34
Figure 5-2: Cattle freely on non-using resettled land 34
Figure 5-3: Recruitment information pasted on the gate
of
a company 35
Figure 5-4: Villa
of
Mr. Pham Van Tru with motorbike mend panel in the front 38
Figure 5-5: Internet
Shop
of
a displaced household 38
Figure 5-6: Chain
of
rooms for lease
of
a resettled household 40
Figure 5-7: Old lady Nguyen Thi An keeping a herd
ofcattle
.41
Figure 5-8: Chart
of
compensation expenses 45

Figure 5-9: New house
of
the most successful displaced household 50
Figure 5-10: Average education
of
household members at the present 60
Figure 5-11: Trends in household income sources 64
Figure 5-12: Trends in average annual income ofhousehold 67
MDE-
Class 13
V111
Determinants
of
Households' Income
in
Planned Areas
Chapter I
1.
Introduction
1.1. Problem statement
The centrally planned economy led Vietnam into deep socio-economic crisis and
serious food shortage in the beginning
of
1980s. In attempting to get the country out
of
its difficult situation, in 1986, the Vietnamese Communist Party (VCP) and the
government
of
Vietnam decided to implement radically innovative reform, known
as

"Doi Moi'' reform towards a market-oriented economy. As a result, Vietnam's economy
has significantly improved and a lot
of
bright achievements. Economy has grown over
7%
per year in the 90s and it still continues to present. The economic growth has
improved living standard
of
people, significantly; GDP per capita rising from under 100
USD
per year in the early
of
1990 to over 800 USD per year in 2007 (WEO 2008).
The industrialization and urbanization process in line with economic reforms has
been taken place throughout the country.
As
a consequence, a large area
of
farmland is
converted into non-agricultural land for expansion
of
urban areas, industrial zones, and
infrastructure. Thanh· (2007) asserts that more than 73,000 hectares
of
farmland was
annually converted for expansion
of
industrial clusters and parks, urban areas and
infrastructure development.
Particularly, in the period

of
2001
- 2005 land conversion
has suddenly increased, approximate
360,000 hectares
of
farmland were shifted into
non-agricultural land in the whole country.
Vietnam is a country with
75
percent
of
its population living in rural areas (Dower
2004:4). Their life and livelihoods are heavily relied on agriculture or at least
agriculture - related activities. Land is, therefore, one
of
the most valuable assets to
farm households, particularly the poor.
It
is
not only the primary means for generating
livelihoods, but also the vehicle to accumulate capital and transfer it between
generations (Moore 1999:3). Therefore, land recovery by the government for
industrialization and urbanization process has strongly affected the life and livelihood
of
farm households in planned areas. Empirical evidence suggests that one hectare
of
farmland converted into non-agricultural land leads ten farmers to be jobless. As a
MDE-
Class 13

1
Determinants
of
Households' Income in Planned Areas
consequence, millions
of
those whose land recovered for industrial, urban and
infrastructure development have become no career since adopting economic reforms in
1986 (Nga
2007).
Binh Duong is one
of
leading provinces in the industrialization and urbanization
process in Vietnam. The first industrial park
of
the Southern provinces was founded in
Binh Duong province in 1995. Currently, Binh Duong has
25
operating industrial
clusters and parks with over 12,135 hectares (ICBD
2009). The industrialization and
urbanization process has significantly stimulated local economic development. Binh
Duong province's
GDP has annually grown over
14
percent and GDP
of
industry has
grown over 36 percent annually, on average in a period
of

1997-
2004. Moreover, the
industrialization process has offered dozens
of
thousands
of
jobs to local people and
migrant workers from other provinces (ICBD
2008). The fast industrialization and
industrialization has caused thousands hectares
of
farmland converted in a period
of
2001
- 2005.
Of
which, converted land was used for Industrial Parks (excluding
resettlement areas) until September,
31st
2005 approximate 2,500 hectares (author
summed areas
of
nine operating Industrial Parks). Consequently, thousands
of
farm
households lost their farm land.
Farmland recovery for non-agricultural purposes has led those displaced farm
households have to adjust partly or even totally their livelihood activities. However,
many displaced households have faced serious challenges in making their livelihoods in
new economic and living environment since most

of
them have traditionally based
agriculture, rural culture and living style, have low education and lack
of
skillfulness in
economic activities other than agriculture. Binh Duong is claimed as one
of
the most
successful localities in solving the compensation and resettlement for farm households
in planned areas; especially, land recovery and compensation for My
Phuoc Industrial
Park project was recognized
as
the most successful one in Binh Duong in terms
of
recovery progress, compensation and resettlement. However, as empirically observed,
displaced people seem to be very hard while seeking their livelihoods in the new living
environment
Although, the impacts
of
land recovery and resettlement on displaced people's
livelihoods have been widely discussed in daily rumors, newspapers, magazines, few
empirical studies on this issue have not been done. In addition, comprehensive studies
MDE-
Class 13
2
Determinants
of
Households' Income in Planned Areas
on displaced farm households' livelihoods are very rare

up
till now. In order to enrich
both theoretical and empirical knowledge on impacts
of
industrialization, urbanization,
land recovery, compensation and resettlement on resettled farm households' livelihoods
and recommend to policy makers strategies to resolve problems created by such policies
and development process, this work will take land recovery for the development
of
My
Phuoc Industrial Park as a case study. The research aims at comparing and analyzing in
detail impacts
of
industrialization and urbanization progress; more precisely the impacts
of
land recovery and resettlement displaced farm households' livelihoods in
My
Phuoc
planned areas by relying on Sustainable Livelihood Framework that developed by DFID
(2001). Besides, I attempt to simulate an econometric model that demonstrates the
relationship between livelihood assets and outcomes
of
households in the planned area.
1.2. Objectives
of
the
study
The study has both conceptual and practical relevance:
1.
It

is
to understand the development process
of
industrialization and
urbanization in Binh Duong province in general and farmland conversion in
particular;
2.
It
is
to have a precise insight on the implementation process related to
recovery
of
land, compensation, subsidy and resettlement in Binh Duong
province (a case
of
My Phuoc downtown);
3.
It
is to describe, analyze, compare livelihoods, livelihood assets and outcomes
of
households in planned areas before and after the recovery
of
land,
compensation, subsidy and resettlement;
4.
It
is
to assess impacts
of
the recovery

of
land, compensation, resettlement and
subsidies policies having on livelihood assets and outcomes ofhouseholds.
As these objectives are fulfilled, this work aims at achieving the two following
basic objectives:
1.
Major policy themes related to land recovery, compensation, resettlement and
their impacts on farm households' livelihoods in planned areas will be
MDE-
Class 13
3
Determinants
of
Households' Income in Planned Areas
recommended to policy-makers
to
construct more effective and flexible policies
and programs on the mentioned issues.
2.
Findings from this work will contribute
to
the growing discussion on the field
related to land recovery, compensation, resettlement and their impacts on farm
households' livelihoods in planned areas
1.3.
Research
questions
1.
How does the policy
of

land recovery, compensation, subsidies and resettlement
implement in Binh Duong province, particularly in My
Phuoc Downtown?
2.
What are livelihood patterns
of
households in planned areas before and after
implementing land recovery and resettlement?
3.
What impacts
do
land recovery, compensation, subsidies and resettlement have
on livelihood assets and outcomes
of
households in planned areas?
1.4.
Outline
of
the
thesis
The thesis is divided into six chapters. The introductory chapter comprises
of
problem statement
of
the study, objectives
of
the study and research questions.
Chapter
II
begins with some definitions and terminologies ofVietnam's Land Law

1993
and 2003 about land ownership, land allocation, land use rights, land price, land
recovery and resettlement. The next section reviews empirical studies
of
land recovery,
resettlement and their impacts on displaced farm households' livelihoods.
Chapter III reviews research methodology used for the analysis throughout this
work.
It
begins with first section including analytical framework and econometric
framework
of
the study. The last section mentions about selection
of
study site, unit
of
analysis, data sources, data collection techniques and methods to analyze collected data.
Chapter IV, in first two sections, presents the industrialization process
of
Binh
Duong province and the background
of
My
Phuoc downtown. Next two sections
mention about regulations
of
Vietnam on land recovery and resettlement, and policies
of
land recovery and resettlement
of

My Phuoc Industrial Park project. The last section
MDE-
Class 13
4
Determinants
of
Households' Income
in
Planned Areas
discovers the implementation
of
policies
of
land recovery and resettlement in My Phuoc
downtown.
Chapter
V presents findings
of
the study, it includes five sections. The first section
describes household's livelihood patterns in planned areas through three different
periods: before land recovery, right after resettlement and at the present. The second
section analyzes compensation implementation and the ways in which displaced
households used their compensation. The third section describes five livelihood assets
(natural, physical, financial, social, and human)
of
displaced households before the
planning and at the present. Next two sections present about expenses and incomes
of
displaced household before the planning and at the present. And final section shows the
determinants

of
households' income in two periods, before the planning and after
resettlement.
Chapter VI summarize the findings
of
the study and recommends some policies
implications which drawn from the research results.
MDE-
Class 13
5
Determinants
of
Households' Income in Planned Areas
Chapter
II
2.
Literature
Review
This chapter presents some terminologies and empirical studies
ofland
recovery,
resettlement and its impacts on displaced farm households' livelihoods.
2.1 Definitions
and
terminologies
2.1.1
Land
ownership
"Land is the property
of

the entire people, uniformly managed by the State"
(Vietnam's Land Law, 1993). The 2003 Land Law
of
Vietnam re-defined: "Land
belongs to the entire people with the State
as
the representative owner".
2.1.2
Land
allocation
"The State shall allocate land to organizations, households and individuals for
stable and long-term
use" (Vietnam's Land Law, 1993). The 2003 Vietnam's Land Law
re-confirmed: "Land allocation by the State means the grant
of
land use rights by the
State by way
of
an administrative decision
to
an entity which has requirements for land
use".
2.1.3
Land
use rights
Vietnam's
1993
Land Law regulated: Certification
of
land use rights will be

granted to those who are using land on a stable basis which is certified by the People's
Committee
of
rural, urban communes and commune towns. Household or individual,
who were land owner, can exchange, transfer, inherit, or mortgage the land use right.
Vietnam's 2003 Land Law adjusted the land use right more detail: Land owners may
exercise the right to exchange, assign, lease, sub-lease, bequeath and donate land use
rights; right
to
mortgage, guarantee and contribute capital using land use rights; and
right to be paid compensation when the State recovers land.
MDE-
Class 13
6
Determinants
of
Households' Income
in
Planned Areas
2.1.4 Land price
Provincial authorities launched decision which regulated land price in province
and this price was used to compute: transfer tax; fees
of
land using, land leasing;
compensation price when the
State recover land for goals
of
military, security,
development, national benefit; Compensation land price for displaced households in
My

Phuoc downtown based on the frame
of
land price
of
Decision no. 24/1999/QD-UB
(dated 06/03/1999)
of
People's Committee
ofBinh
Duong Province.
2.1.5 Land recovery and resettlement
- Land recovery
means "the issuance by the State
of
an administrative decision
to recover land use rights or to recover land which has once been allocated to economic
entities such as individuals, households, economic organizations,
etc." (Vietnam's 2003
Land Law). Land often
is
recovered for objectives
of
national defense and security,
national interest, public interest, or economic development.
- Recovered land's compensation: Decree No. 2211998/ND-CP
of
Vietnam's
Government stated a principle: people, who have recovered land, will be compensated
money or house or new land. Decree No.
197/2004/ND-CP, an upgraded

of
Decree No.
22/1998/ND-CP, regulates more detail: "Persons who have land recovered shall be
compensated with new land having the same using purpose;
if
there is no land for
compensation, they shall receive compensation equal to the land use right value at the
time
of
issuance
of
the recovery decisions; in case
of
compensation with new land or
houses,
if
there is any difference in value, such difference shall be paid in cash."
- Resettlement means policies
of
compensation, relocation, assistance are
provided by the
State (or the organization who using the recovered land) to displaced
people, who have recovered land (Vietnam's Land Law
2003). The resettlement policies
for displaced farmer's households after land recovery often circle these modes: cash
resettlement, employment resettlement, farming resettlement, land reallocating
resettlement, housing resettlement, and social insurance resettlement (ADB
2007).
However, Decree No. 197/2004/ND-CP
of

Vietnam's Government just regulates three
cases
of
resettlement: dwelling houses resettlement, new residential land resettlement
and money for acquiring new residences resettlement. Beside that, it also mentions four
others subsidy and compensation policies, they are:
a)
compensate or support whole
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Determinants
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recovered land, b) compensate or support all assets linked to recovered land and
invested cost in the land, c) support for: moving, stabilization
of
living, training and
transfer job, d) support for stabilization
of
production and life
of
displaced people in
resettled area.
2.1.6 Livelihoods
Livelihood is
"a
mean

of
gaining a living".
"A
livelihood comprises capabilities,
and mean
ofliving,
including food, income and assets" (Chambers and Conway 1991).
Ellis
(2000) suggests a more elaborate definition, that is,
"A
livelihood comprises the
assets (natural, physical, human, financial, and social capital), activities, and the access
to these (mediated
by
institutions and social capital) that together determine the living
gained by an individual or
households".
2.2 Empirical studies
of
land recovery, resettlement and its impacts on
displaced farm households' livelihoods
During the last two decades
of
the
20th
century, about 10 millions people per
year in the world were displaced and resettled due to development projects such as:
industrial parks, irrigation, transportation highways, power generation, urban resident
areas

(Cernea 2000: 11). In China from 1993 to 2003, about 1.7 million hectares
of
cultivated land were converted into non-farming use purposes and this impacted to
approximate 3.3 million farmers, annually.
Farm households in planned areas was recovered all or partly
of
their farmland,
a main asset
on
which their livelihoods are generated. Regularly,
if
investors or
Governments take land from farmers, they must have some resettlement policies such
as: cash resettlement, farming resettlement, vocational training programs to help
displaced households rehabilitate their livelihoods. However, resettlement policies
applied by the authorities still have some limitations and negative effects. For example,
cash resettlement is easy to manage and often is accepted by displaced farm households.
But, it only suited to young people and farmers who are working out
of
horne and was
not suitable to groups
of
above
45
years old or who are low skill labors, it is rather
difficult for these farmers to seek
job
by themselves (ADB 2007). Besides, the efficient
of
vocational training courses and new

job
introduction services to support land loss
farmers still is a big problem. Most
of
displaced households are farmers and low
education, so they have a limited to perceive and compute for their future. Just few
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households invest in training alternative jobs after resettled. Many displaced households
did not use the huge compensated money in a proper way, they used such money to
build new and expensive house, equip luxury electric appliances and vehicles (Quang et
al.
2005, Nang 2006, Sen 2007). In the near future, these households certain faced
difficult situation when the compensation money was exhausted.
According to recent study
of
Sen, although displaced households received
compensation, assistance and subsidies from investors or the government, but
proportion
of
resettled people being jobless and having unstable jobs is still very higher,
occupying over 615 respondents or 44.5 percents
of
sample (Sen 2007). Free time

of
displaced people increases sharply in Vo Que district (Bac Ninh province, Vietnam) due
to industrial zone development, it
is
higher 50 percents
of
working time fund, especially
in young labors force (average age
is
around 26 years old) (Tho 2006).
Land recovery caused losing household's productive assets
o,
such as farmland,
common property resources, jobs, community articulation and the changing
of
culture
living (Webber and Mcdonald
2004).
It
also created several impoverishment risks for
land-loss farmers: income reduction, employment difficulty, poor long-term livelihood
guarantees. Cernea (1995: 251) shows that displaced people will loss some principal
capitals such
as:
natural capital, man-made capital, social capital, human capital. The
farm production and income
of
displaced households
is
major impacted by land

recovery and resettlement. The household's income reduces significantly after the
resettlement (Syagga &
Olima 1996, Webber & Mcdonald 2004, ADB 2007). Many
displaced households have difficulties in rebuilding livelihoods because
of
the lack
of
access
to
common household capital and limited farmland (Heming et al. 2001
).
Especially, a proportion
of
displaced farm households are in a "four-no" status - no
land, no job, no security, and no capital for establishing business.
Only a half
of
them
can be transferred to non-farming employment (ADB
2007).
Land recovery leads to the gradually shifting
of
laborers to non-farming sector.
However, most
of
them just to be employed in fields which require a relative low level
of
education and skills and to be laid off easily due to poor adaptability after a short
period (ADB
2007, Phong 2005). The sharp reduction

of
cultivated land and the
weakness
of
industrial foundation lead
to
the serious surplus
of
rural laborers. Female
employees in displaced areas are impacted firstly because most
of
them are farmers, not
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well educated and just
do
domestic works,
so
they face more difficult
if
leave their
home to find non-farming jobs (Shaoquan et
al.
2004).

After land recovery, people who were relocated into new farmland will face less
changing in their livelihoods. However, in industrial planned areas, displaced people
received often compensated money, resettled residential land or new house. They had
no
farmland after resettlement. Therefore, livelihoods
of
these affected households were
very differing with the prior situation; they had to adopt non-farm livelihood strategies
and urban living style. In developed areas, some affected households used remain
compensation money to build flats for renting, or run small shops, or to buy vehicle
engage transportation (Sen 2007, ADB 2007). The highest second proportion
of
households in the study
of
Nang (2006) deposited remain compensated money in the
bank and received the return
of
interest rate or withdrew a proportion
of
the deposit
monthly for their daily spending.
Price
of
goods in planned areas often increases after
land recovery due to reduce cultivation land areas. Therefore, displaced households in
slowly developed areas will face more difficult, livelihoods is lack and poor while they
have to spend at high price for everything, from water, electricity, coal to food, farm
products (such
as:
rice, vegetable,

) (ADB 2007). Some people had to migrate to find
job after land recovery.
Many empirical studies show various reasons that rural households often
diversify their livelihoods, simultaneously participate in more than one income earning
activities. However, Adi
(2007) used simultaneous equation model suggested by Smith
and Blundell (1986) to estimate the probability
of
participating in non-farm or non-
agricultural activities
of
households, and come to conclude that, despite
of
high
incidence
of
diversification, agriculture still is highly significant to households'
livelihoods in rural communities
of
Eastern Nigeria. Schwarze (2004) also have some
major results after a quantitative study in Central Sulawesi (Indonesia), non-agriculture
activities play an important role in rural livelihoods but households' livelihoods
principally depend on agriculture activities which generate about
70
percents
of
the total
household income. Therefore, lost whole
of

cultivated land and have to adopt non-
agriculture livelihoods are a big leap or shock with displaced farmers. The lack
of
efficient vocational training programs and social insurance for displaced people who are
old or
do
not meet the demand
of
industrial jobs
is
one
of
the foremost causes
of
poverty because
of
land recovery and resettlement (ADB 2007).
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Determinants
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Beside empirical studies about land recovery and resettlement, my study aims to
contribute a specifically evidence
of
My Phuoc downtown to understand more about
determinants
of
households' livelihoods in planned areas before and after the land

recovery and resettlement, advantages and disadvantages that resettled households have
faced after land recovery and resettlement.
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Determinants
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Chapter III
3.
Research Methodology
This chapter sets out to deal with the study's research methodology.
It
begins
with presenting the analytical framework
of
the study which developed by adopting
sustainable Livelihood Framework (DFID
2001) as well
as
definitions
of
livelihood
assets, policies and institution in the framework. The following section presents
econometric
framewqrk
of
the study in two periods, before land recovery and after

resettlement. And the final section mentions about data collection for the study and
techniques
of
data analysis was applied.
3.1. Analytical framework
of
the study
Policies
and
Institutions
Vulm;rabjl!iy
l'ol.icies
of
- Loss
offarmland
COlllJlCUsation, subsidy
·-
and
n'sctth:mcnt
Uv{;llihood
Stratqgies
Livelihood
Outgomes
' '
• Livelihoods
change
U
lnffuencen
and
Access

+Off-Farm
-Culture
living change
+On·Farm
livelihood Assets -Population
<tensity
rise
+
Mo1·e
income
+Well-being
L·

_L,_iv
__
in

_g
__
,_le_ve_·_l,_hi_gl_ic._r
_
_,
c:=:>
H.
+Non-Farm
+Reduce
ndnerability
N F
Figure 3-1: Conceptual framework for the empirical study
(Source: adopted from Sustainable Livelihood Framework

ofDFID
200)
The analytical framework for this empirical work is developed by modifying the
Sustainable Livelihood Framework
of
DFID (2001). Variables included in the
framework are described as following:
• Livelihood assets: there are five types of livelihood capital (assets) as follows:
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Determinants
of
Households' Income in Planned Areas
(i)
Human
capital [H]: "Human capital represents the skills, knowledge, ability
to
labor and good health that together enable people to pursue different livelihood
strategies and achieve their livelihood objectives" (DFID
2001). Household human
capital varies according to household size, skill levels, leadership potential, health
status, etc. and it changes constantly due
to
internal demographic reasons or a deliberate
reformulation in response
to
unexpected events or external pressure (Vien 2007).
Human capital can be improved by investment in education and training, as well
as

experience and skills attained during working process.
(ii)
Natural
capital [N]:
is
the term used referring to natural resource stocks from
which resource flows and services (such
as:
land, wildlife, water, forests, air quality,
erosion protection, biodiversity degree and rate
of
change, etc.) useful for livelihoods
are derived (DFID
2001
).
In rural areas, almost
of
household livelihoods come from all
or part
of
natural resource-based activities. Natural resource comprises
of
renewable and
non-renewable; the former replenish rural people, while the latter may be used
indirectly for making livelihoods (Vien 2007).
(iii) Physical capital [P]: includes the basic infrastructure and producer goods needed
to support livelihoods (DFID
2001). Primarily components
of
physical capital are

usually essential for livelihoods
of
households such
as:
transport, shelter, water, energy,
communication, production equipment, and means (Vien
2007).
(iv) Financial capital [F]: is referred
to
as the financial resources that people use to
achieve their livelihoqd objectives and it comprises the important availability
of
cash or
equivalent that enables people to adopt different livelihood strategies (DFID
2001).
Financial capital consist
of
two primarily sources: available stocks comprising cash,
bank deposits or liquid assets such
as
livestock and jewelry, not having liabilities
attached and usually independent on third parties; regular inflows
of
money comprising
labor income, pensions, or other transfers from the state, and remittances, which are
mostly dependent on others and need to
be
reliable.
(v) Social capital [S]: represents the degree
of

social cohesion in communities.
It
refers to the processes between people that establish networks, norms and social trust,
and facilitate coordination and cooperation for mutual benefit (HDA
2004 cited in
WHO 1998). Key elements
of
social capital include: social resources - e.g. informal
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Determinants
of
Households' Income
in
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arrangements between neighbors or within a faith community; collective resources -
e.g. self-help groups, credit unions, community safety schemes; economic resources -
e.g. levels
of
employment, access to green, open spaces; cultural resources - e.g.
libraries, art centres, local schools. Communities where social capital is abundant are
often characterized by: high levels
of
trust between friends and neighbours; shared
norms and values; local people engaging in civic and community life.
• Policies and institutions: Carloni (2005) defined as an important set
of
man-made
external factors affect to livelihood options, access to livelihood assets

of
household.
Carloni also mentioned: local institutions influence directly and indirectly to household
livelihood strategies, by determining legal/illegal activities, by creating incentives to
pursue certain activities and choices over others, through their influence on access and
control
of
household assets. An enabling or facilitating policy and institutional
environment will assist household access easier to livelihood assets. In contrast, a
disabling policy and institutional environment may create the discrimination and
obstacle household access to their capital.
If
the land recovery is attached with effective
policies and institutions (reasonable
of
compensation, resettlement, training, and
assistance policies), household face less shocks and difficulty in transition period
of
livelihood changing after land loss.
3.2. Econometric framework
of
the study
Based on the analytical framework, the study mms to find out the role
of
livelihood assets playing on livelihood outcomes before and after land recovery and
resettlement, I collected some proxy indicators
of
five livelihood assets as independent
variables rely on Sustainable livelihood guidance sheets
of

DFID (2001). Total annual
income will be selected as a proxy
of
livelihood outcomes
of
household in planned
areas.
Before land recovery for industrial and urban development, livelihood patterns
of
households in planned areas are depended significantly on agriculture. However, to
understand specific determinants
of
household's livelihoods before the planning, I
applied linear regression model with general form:
Yo=
f(LAo)
MDE-
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Determinants
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Where, Y
0
represents the total income
of
observed household before the
planning (year

2000).
LAo
are proxy variables
of
five livelihood assets in year 2000:
human capital, natural capital, physical capital, financial capital, social capital.
After displacement, livelihood assets
of
displaced households changed
completely. Livelihood outcome
of
displaced households has not only based on new
livelihood assets, but also significantly depended on formerly livelihood assets and
investment after displacement. Beside that, investment for livelihood rehabilitation has
also sharply based on compensation factors and formerly livelihood assets. Therefore, to
study determinants
of
household's livelihood after resettlement, I used simultaneous
equation model with general form:
I
= f (C ,
LA'
o , LA' 8 )
Y8
=
f(LA"o,
LA"8,
Sectu,
I)
Where,

•
•
•
I is total investment for livelihood rehabilitation after displacement;
Y 8 is total income
of
observed household after resettlement (year 2008);
LA'o ,
LA"o
are proxy variables
of
livelihood assets before displacement
(year
2000);
•
LA'
8 ,
LA"
8 are proxy variables
of
livelihood assets after resettlement (year
2008);
• C are proxy variables
of
compensation;
•
Sectu
is total spending for education and vocation after resettlement
The above simultaneous equation model was tested by a three-stage estimation
procedure because the endogenous explanatory variables are dependent variables from

other equation, therefore, the ordinary least squares estimations
of
individual equations
in the simultaneous equation model can lead to biased and inconsistent parameter
estimators (Pindyck and Rubinfield, 1991: 228).
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