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MINISTRY OF INDUSTRY AND TRADEHANOI UNIVERSITY OF INDUSTRY---------  ---------ESSAYMACROECONOMICSCAUSES AND SOLUTIONS FOR POVERTYIN LAI CHAU PROVINCE IN 2016-Student: NGUYEN VAN PHUStudent’s number: 2018607097Class: QTKD_CLCSupervisor: HA THANH CONGHanoi, 5/Table of contentsI. INTRODUCTION, OVERV...

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MINISTRY OF INDUSTRY AND TRADE HANOI UNIVERSITY OF INDUSTRY ------------------

ESSAY

MACROECONOMICS

CAUSES AND SOLUTIONS FOR POVERTY IN LAI CHAU PROVINCE IN 2016-2020

Student: NGUYEN VAN PHU Student’s number: 2018607097 Class: QTKD_CLC01

Supervisor: HA THANH CONG Hanoi, 5/202

Macroeconomics

Table of contents

I.

INTRODUCTION, OVERVIEW OF THE RESEARCH PROBLEM........................2 1.

Define...................................................................................................2

2.

Sum up:................................................................................................3

Causes for Poverty:.......................................................................................3 Effects of Poverty:.........................................................................................4 3.

Overview of the research problem.......................................................4

4.

RESULTS OF POVERTY REDUCTION WORK IN THE 2011 - 2015 PERIOD 6

II. CAUSES.......................................................................................................8 Drawbacks..................................................................................................10 III. Soluions....................................................................................................13 1. Effectively implement policies to support production, create jobs and increase incomes of poor households, especially poor ethnic minority people in extremely difficult circumstances:..............................................13 2.

Infrastructure investment..................................................................14

3. Supporting the poor who lack 05 basic social needs under the multidimensional poverty scheme of the Prime Minister:...........................14 4.

Capacity building for poverty reduction officials................................15

5.

Strengthen credit support for poor and near-poor households..........16

IV. SUM UP......................................................................................................16

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Macroeconomics

I.

INTRODUCTION, OVERVIEW OF THE RESEARCH PROBLEM

1. Define Poverty is a multidimensional problem, with numerous causes and contributing factors. Because of its complexity and subtleties, misconceptions abound about the poor. One common belief is that poverty is caused by overpopulation; many people think that if the poor would only stop having children they could rise out of poverty. Another belief is that poor people must have made wrong choices that led to their poverty. While these explanations might seem to make sense on the surface, they are in fact extremely simplistic. In the United States and other developed nations, beliefs about the poor frequently are based on stereotypes: many people think the poor are lazy; that the majority of poor people are immigrants or ethnic minorities; that the poor are single parents who should never have had children to begin with; or that the poor are dangerous, criminals, or mentally ill. Poverty is not the result of personal failings, nor is it only a matter of income. Poverty is directly related to health, education, housing, political opportunities, and other factors. Likewise, poverty worsens people's social status and diminishes their involvement in their communities and in the larger sphere. These human development factors are critical to understanding poverty. They are also critical to solving the immense problem of poverty. Additionally, there are political and economic policies that can contribute to impoverishment. Most of the explanations are, however, as problematic as poverty itself.

2. Sum up: Poverty can be defined as a state in which people are not able to afford enough material goods for their basic needs. This may include food but also social needs. Although poverty tends to decrease and has been decreasing over the past decades, it still is a big problem for many people worldwide. In this article, the causes, effects and solutions for poverty are examined. Extent and Development of Poverty Poverty is a severe issue that is present in some countries much more than in others. In the past decades, poverty has been a big issue for many countries in South-Asia, East Asia and Pacific as well as in Sub-Saharan Africa. A report of the World Bank shows that PAGE 3

Macroeconomics

poverty in South-Asia and East Asia is likely to decrease substantially until 2030. However, in Sub-Saharan Africa, poverty will stay quite stable until 2030.

Causes for Poverty: Low income Adverse climatic conditions Orphanism Lack of education Limited access to credits Health issues Exploitation of labor Inflation and lack of investment opportunities And tons of other causes for poverty…

Effects of Poverty: Dependence Drug use Starvation Mental issues Adverse working conditions Poor housing and living conditions Spread of diseases And a lot of more… Poverty is not a problem of an individual nation but an issue that the whole world needs to solve as soon as possible.

3. Overview of the research problem About Lai Chau province Lai Chau is a border highland province, about 500 km northwest of Hanoi capital, the province's natural area is 9,067.87 km2, accounting for 2.75% of the total area of the country. The whole province has 08 districts, cities, 108 communes, 1,164 villages, including 06 poor districts (according to Resolution 30a), 75 communes, 622 extremely difficult villages. Lai Chau province's population as of December 31, 2015 was over 43,000 people, the average population density of 47 people / km2. The province has 20 ethnic groups living together, ethnic minorities account for nearly 87% of the total population. The percentage of poor households as of December 31, 2015 according to the poverty line for the period of 2011-2015 is 18.75%, and the poverty line for 2016-2020 is PAGE 4

Macroeconomics

40.4%. Natural, socio-economic conditions all significantly affect the reality of poverty and poverty reduction in the province.

Natural condition  Geographical location: The North and Northwest of the province are adjacent to Yunnan province of China, the West is adjacent to Dien Bien province, the East and the Southeast is bordered by Lao Cai and Yen Bai provinces, the South is contiguous. with Son La province. Located on the roads and waterways of the Da River. These are favorable conditions for Lai Chau to develop goods exchange and tourism, and reduce poverty. However, the location is far from development centers, and the infrastructure is still facing many difficulties, which has affected investment attraction, the competitiveness of local goods ...  Wide land, high terrain, diverse ecology, heavy rainfall, cool climate for developing agricultural economy, industrial crops (rubber, tea), medicinal plants (cardamom, astiso ...). However, the terrain is wide but the land area for production and production capacity is low; The complicated climate has brought about many risks in production.  Having a dense system of rivers and streams, which is an important watershed and protection zone of Da and Lai Chau rivers, has great potential for developing hydroelectricity and creating more jobs for laborers.  As a province with many mines of construction materials such as construction stone, limestone ... this is a favorable condition for Lai Chau to develop the industry of mining and mineral processing, and at the same time contribute to creating jobs. making industry - construction area. However, due to low mineral reserves, manual exploitation conditions, the price is not competitive compared with other local goods.

Social and economic conditions  In the past 10 years, the province's economy has had a good growth rate, but its size is small, the budget revenue is low, so the local budget is arranged to implement the poverty reduction program. limited, most of it is central budget.  Local enterprises and production facilities increase rapidly in number of medium and small scale, therefore, do not have enough resources to invest in large projects, especially in potential fields (hydropower, Agriculture …). Policies to attract PAGE 5

Macroeconomics

investment were issued by the province with many incentives but due to many reasons (low infrastructure, small market size; geographical location far from major economic centers ...). Attracting businesses, economic groups to invest in the locality remain modest.  The commodity market is fragmented, spontaneous and the market information system is weak, so it is difficult to sell products to workers.  Lai Chau has an abundant labor force (young population size, high proportion of working age laborers), which is a favorable condition for Lai Chau to promote the implementation of economic development programs. local society. However, the skills are still limited, not familiar with the working style and discipline of industrial labor, so it is difficult to find jobs inside and outside the province.  Lai Chau has 20 ethnic minorities living with many unique cultural features, this is an important condition to promote the development of cultural tourism. In recent years, many models of eco-tourism development in association with community culture have been established and achieved initial results. However, due to low and unequal educational attainment, high percentage of poor households, the idea of self-satisfaction and expectation, dependence still continue to affect the implementation of poverty reduction solutions.

4. RESULTS OF POVERTY REDUCTION WORK IN THE 2011 - 2015 PERIOD In the 2011 - 2015 period, the provincial steering committee issued many guidelines as well as regular field visits to ensure effectiveness. A lot of policies are in place such as:  Preferential credit for the poor  Program on how to do business (agricultural extension - forestry extension) for poor households  Legal aid for the poor  Medical assistance program for the poor  ...

RESULTS Every year, the rate of poor households reduces and exceeds the target assigned by the province every year by 5.6%, exceeding the target set by the Resolution. The poverty rate PAGE 6

Macroeconomics

of the province from 46.78% as of January 1, 2011 decreased to 18.75% as of December 31, 2015. - The idea of waiting and relying on the support of the State and the province has gradually decreased, some poor households have voluntarily applied for escape from poverty. - The life of people in poor communes has been gradually improved. The average per capita income of the whole province in general, especially difficult areas in particular, has a good growth rate, per capita income from VND 8.2 million in early 2010 to VND 18.2 million in 2015. - The infrastructure system in the province is gradually invested comprehensively, especially infrastructure for socio-economic development such as irrigation works, dailylife water, classrooms, and boarding houses. for students ... since then have promoted practical effects to serve production and people's life. - The direction and administration work has been renovated with many contents; Awareness of responsibility on poverty reduction of all levels, sectors and people has been raised, mobilizing the political system to implement poverty reduction. - Vocational training and job creation policies have created conditions for laborers to create jobs or find jobs with stable incomes for themselves and their families; The support policies on health and education have created conditions for people to gradually access and enjoy with more advanced social services. - Policies on supporting production, supporting plant varieties and animal breeds of economic value have contributed to the restructuring of plant and animal breeds in the districts and helped the poor have access to good science. new techniques in production to raise income and overcome poverty sustainably. - Achievements in poverty reduction have contributed to strengthening and strengthening national unity, maintaining political security, social order and safety in the province.

Province’s condition in 2016 Currently, Lai Chau province has 6/8 districts and cities of poor districts according to the Government's Resolution 30a / 2008 / NQ-CP dated 12/12/2008 on rapid and sustainable poverty reduction programs in poor districts. ; There are 75 extremely difficult communes and 617 extremely difficult communes. PAGE 7

Macroeconomics

According to the survey results of poor and near-poor households under the multidimensional scheme as of January 1, 2016, the total number of poor households in the province is 36,094 households, the poverty rate is 40.4%; the number of near-poor households is 8,982, the proportion of near-poor households is 10.05%. In which: The number of poor households in rural areas is 34,246 households, the percentage of poor households is 48.74%; Some communes have a high rate of poor households over 90% such as Bum To 94.8%, Pa Ve Su 94%, Pa Hay 94%. The number of poor households in urban areas is 1,848 households, the percentage of poor households is 9.68%; Some towns have high poverty rate such as: Tan Uyen Town 34.38%, Nam Nhun Town 15.18%, Sin Ho Town 14%. The number of near-poor households in rural areas is 8,694, the proportion of near-poor households is 12.37%; The number of near-poor households in urban areas is 288 households, the percentage of near-poor households is 1.51%. Based on the results of the previous period, the period of 2016 - 2020 needs a lot of changes as well as new measures to reduce poverty throughout the province. Besides, there should also be forms to create a premise for the later period.

II. CAUSES Poverty causes of poor households have many causes, including both objective and subjective causes. According to the 2016 survey of poor households, there are several main reasons:      

Do not know how to do business Lack of production land Labor shortage accounts Low education levels Lazy labor More and more…

There are also a number of other causes such as backward customs and practices, low education levels, lazy labor, due to the difficult distance to live in remote areas, complicated weather ...

Do not know how to do business Because Lai Chau is a northern mountainous province, where ethnic minorities make up the majority of the population. then the language barrier is the problem. Besides, low education level also makes it difficult to know business. Ethnic minorities have a PAGE 8

Macroeconomics

nomadic tradition and do not practice long-term cultivation, so up to now their economic work has never been fully understood. Adult education is 9,820 households, accounting for 27.21%.

Lack of production land Lai Chau is a mountainous province with nomadic people, so it is easy to understand that there is always a shortage of cultivated land. Ethnic people often burn hills to grow agricultural products such as corn or peanuts. With a cycle of 3 to 6 months, when the land on the old hill is no longer fertile, they will move to new hills. But with their nomadic behavior, they find a new hill and do it the old way. The continuous burning of hills has created barren hills that are hard to recover. This has led to a serious shortage of arable land

Agricultural land accounts for more than half, but the percentage of land for rice and seasonal crops accounts for less than 10%.

Labor shortage accounts The lack of labor is mainly because employers often hire Kinh workers with the same language of communication. Therefore, with a large number of ethnic minority people, there is a shortage of labor in Lai Chau province. PAGE 9

Macroeconomics

Low education levels Education is key when it comes to make money and to escape poverty. The better your education, the more money you can demand for your services. However, if your education level is quite low and you do not provide value for firms, your chances to get hired for a well-paying job are quite low since companies usually look out for highlyqualified workers. It is quite difficult for children to get proper education and access to technology since for many families, sending their kids to school is too expensive. Moreover, many children have to work to support their families instead of attending school. Thus, a lack of education can be a big contributor to poverty. The level of shortage of basic social services of poor households in the province: Among 36,094 poor households, the level of shortage of basic social services is as follows: +Adult education is 9,820 households, accounting for 27.21%. + School attendance of children is 1,799 households, accounting for 4.98%.

Inherited poverty There are many studies that show that poverty is often inherited. This basically means that children from poor families have a much higher probability to also stay poor compared to children from rich families. This is quite logical since children from poor families often do not get the education necessary to escape poverty. Moreover, children from poor families often have to take care of their siblings and also work in order to provide for their family members. In contrast, children from rich families are often able to focus on their education and do not have to care about other things too much. They are also more likely to get a credit line for starting a business. The same is true for ethnic minority families in Lai Chau province Thus, it makes it much more likely to become financially successful when you are lucky enough to be born into a rich family.

Health issues Health issues can be both a cause as well as an effect of poverty. Poor people are usually at a higher risk to suffer from health issues due to unhygienic living conditions and also due to malnutrition. Moreover, in case they get sick, many poor people do not have a PAGE 10

Macroeconomics

proper health insurance and may not be able to afford appropriate treatment which can further exacerbate the effects of diseases. Health issues can be a cause for poverty in the sense that when you have a severe disease, you are no longer able to work and therefore the probability for poverty increases. Moreover, you may also no longer be able to provide for your family, which not only leads to poverty for yourself, but also puts your family at risk for poverty. Thus, public health problems can be a serious cause for poverty. The level of shortage of basic social services of poor households in the province: Among 36,094 poor households, the level of shortage of basic social services is as follows: Health insurance 2,381 households, accounting for 6.6%.

Drawbacks - Annually, the poverty rate has been reduced according to the set plan, but the results of hunger elimination and poverty reduction have not been sustainable. Households who have escaped from poverty have a very difficult life and are at high risk of falling back into poverty (every year, about 5-10% of those households will get out of poverty once again after a natural disaster or fire). - Coordination in the direction and administration of a number of party committees, authorities, branches and political and social organizations is not really tight. A number of grassroots level committees have not developed a program or plan to implement the Resolution or have built but not close to the actual situation of the local results. - Although the propaganda and advocacy have gained significant results, it has not really been extensive, so the poor households still have ideas and expectations, rely on the support of the State, and have not proactively moved out of poverty. . A part of the people who are ethnic minorit...