Differing paths to development in Vietnam's Red River Delta

Since reforms were introduced in 1986, Vietnam has achieved substantial poverty reduction, mostly through the redistribution of land to rural populations. Further economic growth will rely on creating new jobs and integrating agriculture into the market economy. The Red River Delta is a successful example.

Despitesignificant recent poverty reduction in Vietnam,high population growth and limited land availability mean that the agriculturalsector will be unable to completely support the country's labour force. Thegovernment’s Comprehensive Poverty Reduction and Growth Strategy acknowledgesthat as Vietnam's economic base moves away from agriculture and intomanufacturing and services, links between rural and urban areas must bestrengthened to balance regional economic growth and poverty reduction.

Vietnam’sRed River Delta is undergoing a major transformation as its economic base movesaway from subsistence farming towards intensive, high-value food production forexport and local urban markets, and non-farm employment. A paper from theInternational Institute for Environment and Development (UK) describes thechanging livelihoods of two villages in Ha Nam province, near the capital city,Hanoi, that represent two different paths to local economic development.

Thevillageof Nhatrelies primarily on varied and intensified agriculture, combined with non-farmactivities. The latter activities include handicraft production and seasonal migrationor farm-related occupations such as provision of agricultural services,transport and trade in agricultural produce. This non-farm income is a crucialsource of cash for investment in agriculture at the household level. The villageof Ngoc Dong, bycontrast, has effectively moved out of agriculture and is almost exclusively occupiedby handicraft production.

Keyfindings include:

• The economic development of both these villagesis linked to their access to markets, including their closeness to local urbancentres and Hanoi,an improved road and transport system and an excellent communications system.
• Both villages have developed good links relatedto their area of production: rattan and bamboo suppliers support the handicraftindustry in Ngoc Dong while agricultural service suppliers support agriculturein Nhat.
• Local authorities have played a key role insupporting local economic development by providing infrastructure, training forhandicraft production and supplies for farmers.
• Migration is significant: in Nhat,migration is three times that of Ngoc Dong as many workers are compelled tomove away, usually returning seasonally to work in farming; migrants from NgocDong, not bound by farming seasons, tend to move further away and for longerperiods.

Thesevillages represent different, yet fairly typical pathways to local economicdevelopment. The 'agricultural' villageof Nhatshows how income diversification can strengthen the agricultural sector.Building on its experience in handicraft production, Ngoc Dong has takenadvantage of trade liberalisation and access to global markets.

Theauthors found that stable long-term economic growth and poverty reduction inthe Red River Delta will largely depend on government strengthening rural-urbanlinks by:

• adopting regulations on land use that allowfarmers to respond better to growing urban demand for high-value produce
• addressing the needs of handicraft enterprises moreclearly in policies for rural industrialisation
• supporting the role of seasonal migration inrural local economic development
• addressing the changing planning and naturalresource management needs of urbanising villages
• strengthening the connection between ruralproducers and urban consumers
• supportingthe links between the agricultural and manufacturing sectors, especially foodprocessing and production of agricultural inputs such as fertilisers.