URBAN RURAL – MIGRATION AND ITS IMPACT ON ECONOMIC DEVELOPMENT

FOREIGN TRADE UNIVERSITY FACULTY OF INTERNATIONAL ECONOMICS —o0o— URBAN – RURAL MIGRATION AND ITS IMPACT ON ECONOMIC DEVELOPMENT Class: KTEE406(1-1718).1_LT Student name: Hồ Ngọc Anh 1412150004 Phan Phương Dung 1411150028 Đỗ Diệu Linh 1411150055 Vũ Cao Quỳnh Chi 1411150023 Katharina Wiehe Germany Lecturer: Assoc Prof PhD Vũ Hoàng Nam Hanoi, 2017 Urban-rural migration and its impact on economic development CONTENTS INTRODUCTION 2! 1.! Importance of study 2! 2.! Objectives of the study: 2! 3.! Scope of study 2! 4.! Research Question: 2! I.! THEORIES 4! 1.! Definition 4! 2.! Factors causing migration 4! II.! BENEFITS FOR BOTH MIGRANT-RECEIVING AREAS AND MIGRANT-SENDING COMMUNITIES 5! 1.! The mutual benefits between rural labor force and national economic transformation 5! 2.! Poverty reduction tool 7! 3.! Contribution to the economic growth of the cities 7! III.!CONTRIBUTION TO THE RESTRUCTURING OF RURAL LABOR 8! IV.! THE URBAN LABOR FORCE IS REPLENISHED AND REJUVENATED 9! V.! THE DISADVANTAGES OF RURAL – URBAN MIGRATION 10! 1.! The shortage of rural labor at harvesting times 10! 2.! Pressure on infrastructure 11! VI.! SOLUTIONS 11! LITERATURE REVIEW 12! METHODOLOGY 14! CONCLUSION 14! REFERENCES 15! Urban-rural migration and its impact on economic development INTRODUCTION 1.! Importance of study In this study the positive and negative changes in all feature included in industrial economics are expected to help setting out different strategies and policy to handle rural to urban migration situation It can be important to find out the main reasons influencing people to leave their homeland, which have increased developmental imbalance between urban and rural areas Introduction of strict rural development leads to effective urban management and weakening of temptations from urban areas Plus, it may provide the concrete views intentionally to support policy makers and planners in their work Additionally, it could motivate other researchers to further research on this topic Not only that, it may help in raising the awareness on rural to urban migration together with migration in general 2.! Objectives of the study: This study will be conducted to determine the factor of internal migration in the shift in Vietnam’s economic industries, using the case of the two major cities, Hanoi and Ho Chi Minh City Especially, this study aims to: •! Define the internal migration, Vietnam’s economic structure, and the shift in the economic industries •! Pinpoint the reason why the high flow of population that moves to big cities like Hanoi and Ho Chi Minh City affects the regional economies •! Identify whether this trend is a positive trend or not •! Determine the further solutions for any listed negative effects 3.! Scope of study In this study, we analyze the urban – rural migration and its impact on industrial economies and the shift of occupation preferences in the two biggest cities of Vietnam – Hanoi and Ho Chi Minh city Vietnam is one of the South East Asian countries While Hanoi is the capital, Ho Chi Minh City is the economic center of Vietnam Both cities are home to the largest universities, organizations in the country With the increasing living standard in these cities, the migration rate from other cities to Hanoi and Ho Chi Minh city has been rising continuously in recent years People head to these cities to seek for higher levels of education, higher living standards and better employment These demands that lead to migration put a strain on economic development, human management and political institutions 4.! Research Question: Urban-rural migration and its impact on economic development Rural-urban migration: a shift in Vietnam's economic industries and the examples of Hanoi and Ho Chi Minh City By choosing this topic, our hypotheses focus on the correlation between internal migration and Vietnam’s economics industries The shift in Vietnam’s GDP by sector is from agriculture to industry and manufacture should be mention With the high demand of labor force in the latter sector, the trend in rural-urban migration found to be increased Through the facts of Hanoi and Ho Chi Minh City, we predict that the labour distribution would be: centralized in industry and construction while decentralized in agriculture sector Therefore, this new trend might bring some positive effect for both migrantreceiving areas and migrant-sending communities, such as poverty reduction and economic sector reformation However the negative effect should be included The shortage of rural labor at harvesting times might affect the productivity and the production of harvests; thus causing more possible drawbacks More rural people migrate to big cities make the population of the areas to boom and put more pressure on infrastructure and other social issues Our specific aim in this report is to: based on facts and statistics, understand better about the fact of internal migration and the correlation between internal migration and the shift in Vietnam’s economic industries Therefore, there will be suggested solutions in order to overcome drawbacks and enhance the positive effect of internal migration Urban-rural migration and its impact on economic development I.! THEORIES 1.! Definition Migration illustrates the process of people moving from one place to another in order to settle temporarily or permanently in the new place There are two important terms that relate to migration including immigration and emigration In a little more details, the main difference between emigration and immigration involves identifying the country of origin and the destination country First and foremost, immigration is especially the international movement of people from one place to a destination where they are not natives in order to settle there with the purpose of taking-up employment as a migrant worker or temporarily as a foreign worker However, emigration is when people leave one country or region to settle in another, either temporarily or permanently and the migrants involved are called emigrants 2.! Factors causing migration Actually, there is a wide range of factors causing the migration of individuals or groups from one place to another destination In this assignment, we mostly pay attention on doing research on reasons of the rural-urban migration trend which is also a part of the internal migration The significant factors which encourage people to move to another place can be divided into the five separate categories such as economic factors, demographic factors, social-cultural factors, political factors and miscellaneous factors (i) Economic factors The basic economic factors which encourage people to move from one place to another may be further classified as ‘Push Factors’ and ‘Pull Factors’ Push factors are things that are unfavorable and cause inconveniences to people living in this area and pull factors are things that have some positive aspects Therefore, it will attract people moving to this area We can state some examples of common push factors such as lack of job opportunities, low productivity, unemployment, poor economic activity, lack of opportunities for advancement, exhaustion of natural resources The Pull Factors are factors which attract the migrants to an area Opportunities for well-paid jobs, higher wages, modern facilities and equipment, comfortable working conditions and attractive benefit packages are considered as pull factors of an area (ii) Demographic Factor The demographic factor which will lead to the internal migration is the population growth rate between separated regions of a nation Due to the fact that the citizens often tend to move to the crowding area because they think that they will Urban-rural migration and its impact on economic development have better job opportunities and more conveniences in their life, the population growth rate between separate regions of a country will be significantly different and be classified as one of the demographic factors leading to the internal migration Besides, it cannot be denied that the marriage is also one of the significant demographic factors in internal migration because the wives tend to follow their spouses and start a new life (iii) Socio-cultural Factors Sometimes the social-cultural factors play a crucial role in the migration of people from on region to another Taking family conflicts as an example, this problem usually happens in young generations, they want to live independently and far away from their family Moreover, some other remarkable factors related to social-cultural issues such as development of communication facilities, good network communication and the infrastructure also motivate migration (iv) Political Factors The political factors should not be underestimated in the analysis of factors causing internal migration In a little more details, the political background, the attitudes and individual opinions also affected the migration of people II.! BENEFITS FOR BOTH MIGRANT-RECEIVING AREAS AND MIGRANT-SENDING COMMUNITIES 1.! The mutual benefits between rural labor force and national economic transformation On the sixth National Party Congress in 1986, the Party initiated the comprehensive reform of the country, focusing on economic reform According to the Orientation, objectives of socio-economic development in 1986-1990 (National Party Congress 1986), the process of economic reform has gradually transformed the economic structure of our country from an agricultural country into a modern industrial country In the process of industrialization - modernization, many large industrial zones have been built in cities such as Hanoi, Hai Phong, Quang Ninh, Da Nang, Ho Chi Minh City, Bien Hoa or Binh Duong This trend directly leads to a conversion of the usage of land into developing urban area, constructing socio-economic infrastructure, it makes many farmers lose their productive land - their main means of production as well (Nguyen 2015, p.6364) Therefore, they are forced to transition to non-agricultural occupations Meanwhile, industrial zones and urban areas have developed and the dynamics of economic sectors have created many jobs, human resources are in short supply, not enough to meet the demand There is no doubt that rural labor are the main source for such shortages through rural-to-urban migration Urban-rural migration and its impact on economic development Year Migration flows Midland and Red river North central Central South East Mekong Total mountainous area in delta and the central Highlands Area river delta the North area coast area 2009 Number of migrants Rural-urban 118,636 395,053 272,948 88,526 1,038,426 198,483 2,112,071 Other flows 373,153 915,724 624,138 286,979 1,838,197 576,269 4,614,507 Total 491,789 1,310,777 897,086 375,541 2,876,623 774,752 6,726,578 Percentage Rural-urban 24.3 30.3 30.6 23.7 36.3 25.8 31.4 Other flows 75.7 69.7 69.4 76.3 63.7 74.2 68.6 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 2014 Number of migrants Rural- urban 83,959 296,902 196,386 55,120 856,723 153,096 1,642,186 Other flows 353,842 747,166 713,322 205,090 1,485,656 521,525 4,026,602 Total 437,801 1,044,068 909,708 260,210 2,342,379 674,621 5,668,788 Percentage Rural-urban 19.3 28.6 21.7 21.2 36.6 22.7 29.0 Other flows 80.7 71.4 78.3 78.8 63.4 77.3 71 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Figure 1: Number of migrants by regions on the 5-year period 2009-2014 Source: Population and Housing surveys 2014: Migration and urbanization in Viet Nam, General Statistics Offices, p 17 Mentioning the size of migration flows, the Southeast has the largest number of rural-to-urban migrants (856.7 thousand people, accounting for over 50% of total rural-to-urban migrants) due to the rapid development of industry, services, high economic development in this region The Red River Delta ranks second in terms of the scale of rural-to-urban migration (296.9 thousand, accounting for 18.1% of all rural-urban migrants), compared to the South East the rate is quite low Urban-rural migration and its impact on economic development 2.! Poverty reduction tool Rural workers go to work in cities, apart from spending in cities, part of their income is transferred to rural areas, which is one of the resources contributing to poverty reduction Unit: percentage (%) 120 100 96.1 95.8 91.9 80 60 40 20 16.8 11.6 1.2 15.4 1.2 Permanent1Migrants Long8term1temporary1 Short8term1temporary1 migrants migrants Artifacts Liquidity Other1forms1 Figure 2: Forms of support for family members in the last time by migration status Source: Institutes of development studies- “ Từ nông thôn thành phố, tác động kinh tế- xã hội di cư Việt Nam”, published in 2011, Lê Bạch Dương&Nguyễn Thanh Liêm, p 116 With the development of a market economy and the ease with which money can be sent via secured forms at reasonable costs, the transfer of cash to relatives has become common practice More than 90% of migrants assist their relatives in cash, while less than one in five migrants have been supporting relatives in the last 12 months in artifacts according to the survey (Le & Nguyen, 2011, p 116) 3.! Contribution to the economic growth of the cities Migrant workers in cities are not only a source of development, they also contribute to local productivity growth (GDP) through personal spending: eating, rent housing, some other social services (Nguyen 2015, p.63-64) such as health insurance, education, entertainment, Urban-rural migration and its impact on economic development III.! CONTRIBUTION TO THE RESTRUCTURING OF RURAL LABOR The majority of rural workers before migrating worked in the agricultural sector After migration, the workers themselves have made fundamental changes in their career, from agricultural to non-agricultural work, which is one solution to speed up the process of rural industrialization and modernization, contributing to the improvement of the living standard and the raising of incomes Regions Whole country Rural Red river delta South east 2010 2012 2014 2010 2012 2014 2010 2012 2014 2010 2012 2014 Total Nonfarm Farm wage Farm self Nonfarm wage employment employment self employment employment 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 34.1 34.7 35.9 25.9 26.7 28.1 45.5 44.8 47.7 54.2 54.8 55.0 4.5 4.7 4.5 5.4 5.8 5.5 0.8 0.8 0.7 5.4 5.6 5.8 41.3 41.7 40.9 53.3 52.8 52.2 29.9 31.6 29.3 14.6 16.3 14.6 20.1 18.9 18.7 15.4 14.7 14.2 23.8 22.8 22.3 25.9 23.3 24.6 Figure 3: Population aged 15 years old and over in main job in the past 12 months by type of job, urban rural, region, income quintile and sex Source: Source: General Statistics Offices, Result of the Viet Nam household living standards survey 2014, p 170-172 The figure shows a considerable increase in rural population in the whole country working in non-agricultural jobs in a 4-year-period from 2010 to 2014 (25.9 to 28.1 percent) This trend was remarkably obvious in two areas including Ha Noi and HCM city: Red River Delta (45.5 to 47.7 percent) and South East (54.2 to 55.0 percent) Unit: percentage (%) Urban-rural migration and its impact on economic development Occopation1structure1of1employed1migrants1and1non8 migrants 1.32.5 Leaders 6.5 6.4 Semi8professionals 9.4 13.2 2.9 5.4 Services1workers 31.8 22 0.3 0.5 17.719.6 15.8 22.7 17.7 Manual1labor1and1others 4.4 Simple1Labor 10 Non8migrants 15 20 25 30 35 Migrants Figure 4: Occupation structure of employed migrants and non-migrants Source: National Internal Migration Surveys 2015, General Statistics Offices, p 98 The results presented in the figure show that the demand for migrant labor is partly due to industrial development in Vietnam For example, the percentage of "operators and assemblers of machinery labor" was 12 percentage points higher than that of non-migrants (15.8% and 4.4%) Migrant workers with higher levels of technical and professional qualifications in the capital city of Hanoi and the northern mountainous midlands are higher than in other regions (11.0% and 11.4%, respectively) The South East and the Red River Delta are home to a large number of factories, factories, and industrial zones, attracting a significant number of migrants and non-migrants working in two occupational groups of “Manual labor and others "and" machine operators and assemblers " (56.6% and 43.5% respectively) Especially clear from the table is that the migrants are moving from the agricultural sector to the non-agricultural sector proved by the figure of skilled labour on agriculture (only 0.5 %) IV.! THE URBAN LABOR FORCE IS REPLENISHED AND REJUVENATED Migration has contributed to reinforce labour force in cities Migrant workers are more flexible and more active in finding employment, accepting heavy, hazardous, low-income jobs that urban people avoid The point is that migrants tend to migrate at relatively young ages for the purpose of labour and continuing education Ages Ha Noi Ho Chi Minh City Urban-rural migration and its impact on economic development Migrants Non-migrants Migrants Non-migrants Total 100.0 100.0 100.0 100.0 15-19 16.6 8.7 13.4 9.7 20-24 32.4 10.1 22.7 9.7 25-29 19.8 12.9 20.0 13.5 30-34 13.8 14.7 15.5 13.4 35-39 6.2 12.2 9.4 13.7 40-44 4.6 10.8 7.3 11.7 45-49 2.2 9.6 3.9 9.7 50-55 2.0 9.8 4.0 8.8 55-59 2.4 11.2 3.8 9.8 Number of 1,125 3,263 1,264 3,666 people Figure 5: Migrants and non-migrants ratio by ages in Ha Noi and HCM Source: National Internal Migration Surveys 2015, General Statistics Offices, p 36 The figure shows that migrants are most concentrated in the 20-24 age group For example, while migrants aged 20 to 24 in the Red River Delta account for 38.1% of all migrants in this region, the same age group in Ho Chi Minh City only accounts for 22, 7% The majority of these migrants are young (more than 60% of migrants are under 30 years of age), except for Ho Chi Minh City (56.1%) The proportion of migrants under the age of 30 in the Red River Delta is 76.3%, in Hanoi it is 68.7%, and in the other regions it is quite similar from 60.5% to 65.5% V.! THE DISADVANTAGES OF RURAL – URBAN MIGRATION 1.! The shortage of rural labor at harvesting times Migration with the primary purpose of seeking employment in the process of urbanization and as an objective trend has become a movement in many localities, leaving the rural elderly and children According to the Ministry of Labor, Invalids and Social Affairs (MOLISA), about 70% of migrants are working age people and the trend of rejuvenation is increasing The inevitable consequence of this is the lack of rural labor at times of crop failure, resulting in local imbalances, structural changes 10 Urban-rural migration and its impact on economic development and division of household labor, which have a significant impact on production, agriculture and other rural activities 2.! Pressure on infrastructure The migration from the countryside to the cities makes the infrastructure and the urban landscape break down, deflecting the goal of building civilized and modern urban areas As the number of people migrating to the large cities, along with the increased use of transport means, the urban transportation systems not catch up, causing traffic jams in most urban areas Many other consequences such as noise pollution, traffic accidents, environmental pollution, etc., are some of the challenges cities have to tackle nowadays VI.! SOLUTIONS To restrict free rural-urban migration, the problem is to have practical solutions, both synchronous and breakthrough, focusing on the ultimate goal is to build prosperous rural areas The following solutions meet these requirements: •! First, reduce bias in urban and rural development policies; increased investment in infrastructure development and public services; raise budget capital for investment in construction of agricultural and rural infrastructure; Build commercial infrastructure in service of circulation of forest and forest products, especially in deep-lying and remote areas; widespread implementation of agricultural extension policy •! Secondly, complete the policy system supporting agriculture and farmers; to increase the scope and level of support to farmers Particular attention is paid to land use rights policies, social welfare policies for farmers such as health insurance, support for poor farmers in education, vocational training and promotion; set up employment, insurance as compensation for farmers when the Government recovers land •! Thirdly, shift the structure of rural labor towards reducing the proportion of purely agricultural workers while increasing the share of labor in non-agricultural occupations; At the same time, strongly encourage farmers and businesses to invest in developing production and business in the agricultural sector •! Fourth, continue to promote hunger eradication and poverty alleviation programs, especially in remote and mountainous areas, ethnic minorities, focusing on anti-poverty measures •! Fifthly, to expand the interaction and mutuality in solving the problems of agriculture, farmers and rural areas with other areas of society; addressing agricultural, rural and rural issues towards modernity and sustainability 11 Urban-rural migration and its impact on economic development LITERATURE REVIEW The following sections should give an overview over the research that has already been done regarding rural-urban migration in Vietnam The aim is to show that there also are other approaches to look at migration in Vietnam except from the rural-urban economical point of view In the first place, it occurs a consensus among the literature, that Doi Moi has led to unequally distributions of benefits among the population As a result, rural-tourban migration is more likely to be observed The most likely reason for migration is not unemployment, but the chance to improve the recent living situation by seeking for better jobs with higher wages (Le Thi Kim Anh et al., 2012) In a research published by Glob Health Action in 2012 you can find broad information on different demographic groups that migrate, the circumstances under which people migrate and reasons for this migration The research shows that especially females tend to migrate and that the biggest proportion of migrants comes from people aged 20-40 years old (Le Thi Kim Anh et al., 2012) As a conclusion Le Thi Kim Anh points out that "[t]hese trends reflect unequally growing labour markets in Vietnamese provinces and imply improvements in infrastructure" (Le Thi Kim Anh et al., 2012, pp 10-11) Another approach chosen by Loc Nguyen Duc, Katharina Raabe and Ulrike Grote was to examine the impact of migration on rural households It came out that households with open financial debt positions as well as households with members who have completed secondary education are more likely to consider migration as a way of living As a result of the research they were able to prove that migration does have a siginificant positive effect on the households' income growth Thus migration has been seen as "an adapting strategy for households experiencing social shocks (Loc, N Raabe, K Grote, U 2012) The matter of time is also a considerable factor when examining migration It has been shown a link between the length of migration, the remittances transfers, the localized physical assets and the localized social capital As a result it came out that single migrants with higher educational levels tend to stay longer in the cities Apparently the household size plays a comparable role as the educational level with respect to the length of the migration (Loc, N Raabe, K Grote, U 2012) Since Le Thi Kim Anh's study already claims that there are more female migrants than male migrants as mentioned above, Dang Nguyen Anh states the unequally falling rural wages as a reason for this phenomenon as well as the industrial shift to labour-intensive products Besides describing the types of migrants as other studies did already, Nguyen goes a step further by having a look at the impact of migration on other sectors He states that remittances by migrants considerably contribute to the vietnamese economy 12 Urban-rural migration and its impact on economic development However, it needs to be distinguished between remittances made by internal migrants and remittances made by international migrants, because those of the latter tend to be more substantial while remittances provided by internal migrants are more likely used for daily consumption By explaining international and internal migration with regards to according costs for the migrants, economic reasons and social circumstances, the study manages to give a broad insight into Vietnam's current situation (Anh, D Tacoli, C Thanh, H 2003) As today's literature mainly states reasons of individuals and behavioral patterns of migration, it hardly claims consequences and changes for the affected areas and their industries Thus, the still increasing trend of migration in Vietnam should be examined moreover 13 Urban-rural migration and its impact on economic development METHODOLOGY The analysis of rural-urban migration in Vietnam in this paper is based on data from National Internal Migration Surveys 2015 and Population and Housing surveys 2014 Additionally, data was collected from surveys and case studies carried out by local and internal organizations, including Institutes of development studies This analysis aims to examine the impact of internal migration on the economic development of Vietnam Moreover, due to the sample size and the questions related to migration in the investigation, we have to emphasize one big limitation in these figures, which is that most of the data did not mention all migrants and their migration flows, especially the seasonal and the temporary migrants because of their movement in a short period of time In addition, this paper uses the empirical-analytical approaches which pay most attention on understanding the Vietnamese internal migration and through the actual data and figures we can answer all research questions that we have set up CONCLUSION As the thesis and the current literature show internal migration is an issue Vietnam has to deal with Especially the movement of high potential individuals from rural areas to more promising urban areas causes changes the society has to adjust to The main challenge is avoid that the gap between rural and urban areas gets even bigger Thus, the development of rural areas needs to be supported That is, it has to become more attractive for young educated individuals to stay at home with their families which is only the case if job chances in the countryside are about to come up Nevertheless, if this is not the case, the rural areas will receive support from the migrant workers through remittances, but this will not lead to a sustainable economy and a development that is wanted The aim should be to have a balanced distribution of population throughout the country so that the infrastructure does not collapse and that the different areas have similar conditions to develop and to reduce poverty After many research has been done now on why people migrate and what effects this can have on society and government, it now should be examined how to reach the goals above to solve the problems caused by rural-urban migration before they become too big 14 Urban-rural migration and its impact on economic development REFERENCES Anh, D Tacoli, C Thanh, H (2003) Migration in Vietnam 1st [pdf] Dhaka: Refugee and Migratory Movements Research Unit pp 8-17 View 12/09/2017 Anh, L Vu, L Bonfoh, B Schelling, E (2012) An analysis of interprovincial migration in Vietnam from 1989 to 2009 5th [pdf] Glob Health Action View 12/09/2017 Dinh, Q Ha 2013, “ Di dan tu o Viet Nam: thuc trang va giai phap", Tạp chí Khoa học xã hội Việt Nam, vol 11 (72) - 2013 , p 74 General Statistics Offices & UNFPA 2016, National Internal Migration Surveys 2015, Thong Tan publishing house, Ha Noi, p 36-37, 98 General Statistics Offices & UNFPA 2016, Population and Housing surveys 2014: Migration and urbanization in Viet Nam, Thong Tan publishing house, Ha Noi, p 17 General Statistics Offices 2016, Result of the Viet Nam household living standards survey 2014, Statistical Publishing house, Ha Noi, p 170-172 Le, B Duong & Nguyen, T Liem 2011, “ Tu nong thon pho: tac dong kinh texa hoi cua di cu o Viet Nam", Lao Dong Publishing house, Ha Noi, p 116 Loc, N Grote, U (2015) Rural-Urban Migrants in Vietnam: Should we Stay in the Cities or Return Home? 1st [pdf] Milan: Universita Degli Studi Di Milano pp 2-7, 14 View 12/09/2017 Loc, N Raabe, K Grote, U (2012) Rural-Urban Migration in Vietnam: Do Households and Migrants Get Better Off? 1st [pdf] Göttingen: Leibniz University Hannover View 12/09/2017 Nguyen, Nu Doan Vy 2015, “ Tac dong cua di dan tu den kinh te- xa hoi", Tap chi kinh te xa hoi Da Nang, vol 67, p 63-67 15 ... 4.! Research Question: Urban- rural migration and its impact on economic development Rural -urban migration: a shift in Vietnam's economic industries and the examples of Hanoi and Ho Chi Minh City... demand There is no doubt that rural labor are the main source for such shortages through rural- to -urban migration Urban- rural migration and its impact on economic development Year Migration flows... solutions in order to overcome drawbacks and enhance the positive effect of internal migration Urban- rural migration and its impact on economic development I.! THEORIES 1.! Definition Migration