URBAN RURAL – MIGRATION AND ITS IMPACT ON ECONOMIC DEVELOPMENT

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

FOREIGN TRADE UNIVERSITY FACULTY OF INTERNATIONAL ECONOMICS

—o0o—

IMPACT ON ECONOMIC DEVELOPMENT

Class: KTEE406(1-1718).1_LT

Student name:

Lecturer: Assoc Prof PhD Vũ Hoàng Nam

Hanoi, 2017

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!

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 do 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:

the economic industries

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:

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 migrant-receiving 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

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

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

-64) 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

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

accounting for over 50% of total rural- -tourban migrants) due to the rapid development of industry, services, high economic

accounting for 18.1% of all rural urban migrants), compared to the South East the rate is quite lo- w

Year Migration

flows

mountainous area in the North

Red river delta area

North central and the central coast

Central Highlands

South East Area

Mekong river delta area

Total

2009 Number of migrants

Percentage

2014 Number of migrants

Percentage

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 (%)

Figure 2: Forms of support for family members in the last time by migration status

Source: Institutes of development studies - “ Từ nông thôn ra thành ph ố, tác độ ng kinh t ế- xã h ội của di cư ở Việ t Nam”, published in 2011, Lê B ạ ch D ương&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,

0

20

40

60

80

100

120

migrants

Short8term1temporary1 migrants

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

wage employment

Farm wage employment

Farm self employment

Nonfarm self employment Whole

country

Red

river

delta

South

east

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 3 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 (%)

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 4 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

17.7 15.8 17.7 0.5

22 5.4

13.2 6.5

1.3

22.7 4.4

19.6 0.3

31.8 2.9

6.4 9.4 2.5

Simple1Labor

Manual1labor1and1others

Services1workers

Semi8professionals

Leaders

Occopation1structure1of1employed1migrants1and1non8

migrants