Development of agro economic links between hanoi and its neighbouring provinces

Its neighbouring provinces’ additional provision of farm produce, formation of food and forest belts, and creation of detention reservoirs have made Hanoi a green city while Hanoi’s agri

MINISTRY OF EDUCATION AND TRAINING

NATIONAL ECONOMICS UNIVERSITY

HOÀNG MẠNH HÙNG

DEVELOPMENT OF AGRO-ECONOMIC LINKS

BETWEEN HANOI AND ITS NEIGHBOURING

PROVINCES

Specialty : Agricultural Economics

Code : 62620115

ABSTRACT OF DOCTORAL DISSERTATION

IN ECONOMICS

HANOI 2014

This doctoral dissertation is completed at the National Economics University

Supervisors:

1 Assoc Prof Dr Phạm Văn Khôi – NEU

2 Assoc Prof Dr Nguyễn Văn Áng – MoET

Offender No 1: Assoc Prof Dr Nguyễn Đình Long

Offender No 2: Assoc Prof Dr Nguyễn Ngọc Sơn

Offender No 3: Assoc Prof Dr Nguyễn Khắc Thanh

The oral defense of this PhD dissertation take place before the University-level Council at [place] ……… at [time]

……… [date]……….…

Available at Library:………

INTRODUCTION

1 Rationale of the Study

Geographically located in the centre of the Red River Delta (the RRD), Hanoi,

the capital of Vietnam, has an extremely important location both to the country in

general, and to the RRD and its neighbouring provinces in particular

Agriculture in Hanoi provides the city with farm products to meet its

inhabitants’ diverse and growing needs However, its increasing less farming land

due to rapid urbanisation, issues of environmental protection and employment in its

suburban districts have all been urging Hanoi to establish agricultural links with its

neighbouring provinces

Over the past years, especially since its boundary expansion, Hanoi’s

agro-economic links with its seven neighbouring provinces have been created, at first

spontaneously and then increasingly proactively Its neighbouring provinces’

additional provision of farm produce, formation of food and forest belts, and

creation of detention reservoirs have made Hanoi a green city while Hanoi’s

agriculture, with an advantage of being based in the country’s centre of sciences,

have provided the provinces with models of approaching science and technology

for producing precious specifies

Facing an increasingly rapid urbanisation in the coming years, Hanoi is going

to have both increasingly less farming land and growing needs of farm produce in

terms of quantity, quality, types, and food hygiene and safety; its issues of

enviroment and employment are thus becoming more serious As a result,

development of agro-economic links between the capital and its neighbouring

provinces is obviously an urgent requirement

Noticing the need to do research on the above-mentioned practical issues, the

author has selected the topic “Development of agro-economic links between Hanoi

and its neighbouring provinces” for his Ph.D dissertation in economics

2 Aims of the Study

The study shall look at both theoretical and practical issues, evaluate the

current situation of the agro-economic links between Hanoi and its neighbouring

provinces, and then propose directions and solutions to promote development of

agro-economic links between Hanoi and its neighbouring provinces to the year

2020

3 Objects and Scope of the Study

4.1 Objects of the Study

The objects of the study are agro-economic links between Hanoi and its

neighbouring provinces in terms of form, nature, and link areas In addition, the

study shall look at factors that influence establishment and organization of

implementation of those economic links such as the typical features of the linking

parties, the role of macro-level management, impacts caused by industrialization

and modernization, and, especially, the urbanization rate of Hanoi and its neighbouring provinces

4.2 Scope of the Study

- Scope of the Contents: The dissertation shall study such major issues as (1) Theories on regional economic links and agro-regional economics; theoretical

expressions in Hanoi’s agro-economic links with its neighbouring provinces; (2)

Practical domestic and foreign issues as lessons of experience for development of agro-ecoomic links between the capital and its neighbouring provinces; (3) The reality of development of agro-economic links between Hanoi and its neghbouring provinces; (4) New opportunities and challenges in development of agro-economic links between Hanoi and its neghbouring provinces to the year 2020

- Spacial scope: The dissertation shall study the agro-economic links between Hanoi and its seven neighbouring provinces (i.e Vĩnh Phúc, Phú Thọ, Bắc Ninh, Thái Nguyên, Hưng Yên, Hà Nam và Hòa Bình)

- Temporal scope: The dissertation shall evaluate data of the period between

2000 up to the time of this study, with a focus on the period between 2008 and

2012 in which Hanoi has had an expanded boundary

4 Methodology

4.1 Approaches

- Approach to the objects of the study: This dissertation has approached

agro-economic links between the two parties (i.e Hanoi and its neighbouring

such activities of state management as planning, plans, commitments, management coordination between business parties through joint-ventures, economic contracts… In addition, the dissertation has approached and researched influencing factors of agro-economic links between Hanoi and its neighbouring provinces

- Approach to the research space: This dissertation has approached agro-economic links in a two-way direction with Hanoi on one side and its neighbouring provinces on the other side The dissertation does research neither on agro-economic links between Hanoi’s neighbouring countries, nor on Hanoi’s internal agro-economic links, nor on those within one of those neighbouring provinces

4.2 Methods of the Study

Apart from taking use of the general methodologies (e.g dialectical materialism and historical materialism that are applied to study of phenomena in their movement and in a scientific and objective way), this dissertation applies such specific methods as expert consulting, document consulting, data synthesis, analysis, and processing, sociological survey

5 New Contributions of the Study

This dissertation has systemized and analysed the scientific background of agro-economic links, based on which to specify and find out the typical characteristics of the agro-economic links between Hanoi and its neighbouring

provinces The author has investigated, surveyed, analysed and evaluated the reality

of the agro-economic links between Hanoi and its neighbouring provinces in two

periods of time (i.e before and after Hanoi’s boundary expansion) The dissertation

has found out achievements and limits of those links and their effects on production

and life; in addition, it has indicated the causes of those achievements and limits,

and it has provided the viewpoints, directions and solutions to promote the

agro-economic links between Hanoi and its neighbouring provinces đến năm 2020

6 Dissertation Organisation

Apart from the Introduction, the Conclusion, the References, and the Appendix,

this dissertation is organized into four chapters

CHAPTER 1 OVERVIEW OF RESEARCH OF AGRO-ECONOMIC LINKS

BETWEEN HANOI AND ITS NEIGHBOURING PROVINCES

Regional agro-economic links is among the rules that have much effect on

production and life; therefore, this topic receives attention by scientists and

managers internally and externally In this part, the author has reviewed domestic

and foreign research on agro-economic links between a capital city and its

neighbouring provinces, based on studies of both classical and modern planning

economists in various forms ranging from published monographs to research

achievements of different master and doctoral dissertations, and to articles from

journals and newspapers The review has led to the conclusion that agro-economic

links between a capital city and its neighbouring provinces as a topic has been little

studied in other countries In Vietnam, the topic of agro-economic links between

Hanoi as the capital and its neighbouring provinces has not been fully studied to the

size of a scientific research – there are therefore various gaps left for this

dissertation, and this research does not overlap with the published studies available

to the author of this dissertation

Based on that conclusion, the dissertation has identified the following topics for

research: (1) Systemisation, clarification, and provision of viewpoints of theories

on regional economic links, with a focus on clarification of objective background

for agro-economic links and basic issues of regional agro-economic links (2)

Specification of issues of regional agro-economic links in development of those

between the capital city and its neighbouring provinces (3) Use of theoretical

analysis framework in analysis of the reality of development of the agro-economic

links between Hanoi and its neighbouring provinces; comparison of theoretical

issues and the typical features of the economic link environment with the reality of

development of the agro-economic links between Hanoi and its neighbouring

provinces (4) The study not only evaluates the reality of certain links in a specific

space but also finds out the causes of the reality and solutions to overcome them

CHAPTER 2 THEORETICAL AND PRACTICAL BACKGROUNDS

OF AGRO-ECONOMIC LINKS BETWEEN HANOI AND ITS NEIGHBOURING PROVINCES

2.1 Theoretical background of the agro-economic links between Hanoi and its neighbouring provinces

2.1.1 Fundamental theories for regional agro-economic links

The dissertation systemizes and analyses the theories on value chain of farm produce and labour division to clarify the background for region-based and sector-based agro-economic links in a region; the theories on growth poles as the basis for identification of the role and typical features of the agro-economic links between Hanoi and its neighbouring provinces

2.1.2 Concept of agro-economic links between a capital and its neighbouring provinces

Based on economic links, the dissertation provides the concept of regional agro-economic links, based on which it is argued that agro-economic links between

a capital and its neighbouring provinces is a specific type of regional agro-economic links In nature, it is also an agro-economic link between production, supply, processing, and consumption of farm produce; transfer of scientific and technical advances and the management relationship of the governments and organizations between the capital city and its neighbouring provinces

However, the characteristic of being the capital provide a difference in agro-economic links between the capital and its neighbouring provinces, in which the differences from regional agro-economic links stem from the initiative of the capital agriculture, the coordinativeness in links, the strictness of farm product quality of a high purchasing power market, and being the country’s representative

in international transactions

2.1.3 Principles of agro-economic links between a capital and its neighbouring provinces

Because regional agro-economic links and agro-economic links between a capital and its neighbouring provinces are both connections between economic parties, they are therefore both based on the principles of economic links and have typical expressions at different levels of economic link as follows:

(1) To ensure development and increasing effect of production and business of different parties involved in a link (2) All parties of agro-economic links between a capital and its neighbouring provinces must be voluntary and self-responsible

2.1.4 The role of agro-economic links between Hanoi and its neighbouring provinces

- In economic terms: Thanks to economic links, the neighbouring provinces’

agriculture can approach the capital’s large market that has high purchasing power and sell large amount of farm produce at higher prices In contrast, the capital’s

agriculture can support its neighbouring provinces in producing high-quality

products that improve production effects; help businesses and involved parties,

especially the neighbouring provinces’ agriculture, to have more alert reactions to

changes in the business environment; assist organizations, individuals, and

businesses in transferring technologies to one another at low costs and in shorter

time periods thanks to mutual trust and goals; and, to favour businesses in sharing

production risks, especially in the current global market condition of many

complicated changes

However, economic links have their own disadvantages such as a favour of

monopoly and limit of competition between market parties that lead to damages for

the buyer (caused by the seller’s monopoly) or those for the supplier (caused by the

buyer’s monopoly) In addition, economic links may risk collapsing, even in a

chain reaction, when either of the involved parties goes bankrupt This situation

may destabilize the economy

- In social and environmental terms: Economic links contribute to more

employment, increased income for farming workers both when businesses or the

provinces have advantages or difficulties Those links provide an ability to supply

and sell goods in the market in contribution to stabilization of the market,

especially that of the capital Economic links make organizations, individuals, and

businesses work together and implement state policies consistently Thanks to those

links, the natural environment is properly exploited, protected and developed

2.1.5 Content of agro-economic links between a capital and its neighbouring

provinces

Economic links are seen in two aspects: those between state management

agencies in charge of the farming produce sector and those between the different

agents in the farming produce sector, specifically as follows:

- Economic links between the state management agencies of the capital and

those of its neighbouring countries are (1) Links in planning and organization of

implementation of regional agro-development planning (2) Links in trade

promotion, sale of farm produce, especially safe products in the capital’s market

(3) Links in coordination of state management in agriculture (i.e plant protection,

veterinary practice, management of water resources, research and exchange of

science and technology, policy…)

- Economic links between agricultural businesses of the capital and its

neighbouring provinces are (1) Links in investment in exploitation of resources, in

which the provinces have quite abundant resources and the city has better capacity

of resource exploitation As a result, each side can tap its own advantages

(2) Economic links in transfer of scientific and technological advances, which

are based on exploitation of the capital’s businesses’ scientific and technological

advantages and on its neighbouring provinces’ needs to update technology for

production and business of farm produce

(3) Links in agricultural production and processing and investment by the capital’s busineses in its neighbouring provinces to provide stable inputs for farm produce processing businesses in the capital

(4) Links between farm producers and sellers in the capital: This type of link is the most popular among the capital’s neighbouring provinces due to the currently limited condition for large-scale agricultural processing of Vietnam

2.1.6 Forms of agro-economic links between the capital and its neighbouring provinces

The current forms can be categorized into the following typical groups:

- Links that turn small businesses into big ones in agricultural products: This form of link creates big corporation or economic groups, for example state corporations 90 or 91 in Vietnam In this type of link, businesses can promote their size of capital and business results to compete in the market… This type of link is often organized on a large scale, even throughout the country, and in terms of a product or a group of products

- Economic links in form of unions of cooperatives: Economic links between economic parties, mainly in the form of a union of cooperatives, under which the member cooperatives join with one another voluntarily or through economic contracts In a multisector economy, this type of link is available not only among cooperatives themselves but also between cooperatives and Trong nền kinh tế nhiều thành phần, mối quan hệ liên kết không chỉ hình businesses from the other economic sectors

- Processing contracts: This form is popular in sectors not requiring highly complicated economic links This form of link in agriculture is found in the stages

of preliminary processing of farm produce or traditional handmade processing

- Joint-ventures between independent businesses: This form involves either only domestic businesses or both domestic and foreign businesses In terms of farm produce, such a joint-venture can be found when businesses cooperate in production, processing or selling in order to increase supplies of farm produce so as

to meet big needs One example is a link between farmers raising suckling pigs so

as to meet an export need of tens of thousand tons of pog at a certain time

- Associations: Having quite a lot of variants, this link is formed between highly voluntary businesses, households, and individuals Such a business association comes into being from businesses in one sector such as the Coffee-Cocoa Association, the Fisheries and Seafood Processors Association…

2.1.7 Factors influencing the agro-economic links between a capital and its neighbouring provinces

The dissertation focuses on analyzing the following factors: (1) Economic policies; (2) Natural resources; (3) Market; (4) Technology; (5) Psychology and customs of producers and consumers; (6) Capital and forms of production organisation Both the positive and negative aspects of the influences are

considered, and the author arrives at the conclusion that all influences must be

taken into account to promote positive influences and limit negative ones so as to

facilitate smooth economic links and produce expected results

2.1.8 Assessing results and effects of agro-economic links between Hanoi and

its neighbouring provinces

- Assessment methods: Assessment must be carried out in two areas: (1) Results

of agro-economic links seen in size and degree of link between the agricultural

sector of the capital and that of its neighbouring provinces; (2) Assessment of

economic results and effects of each activity by parties involved in a link process

Such assessment is conducted through a system of criteria for economic results and

effects, but measurement and analysis of those criteria must pay attention to the

requirement that calculations must be correct and sufficient without overlaps so as

to result in the most exact cost figures In analyzing the criteria, the relationship

between results and costs and businesses’ goals of organizing production and

processing must be taken into consideration

- The assessment criteria:

+ The criterion on degree of province-based participation in agro-economic

links of the capital and that of its neighbouring provinces: (1) The rates of subjects

involved in agro-economic links over the total number of subjects doing business in

the farm produce sector of the capital and its neighbouring provinces The rates are

expressed in percentage and can be detailed into seven sub-criteria (2) The degree

of participation in agro-economic links in business of economic subjects This is

also expressed in percentage and detailed in accordance with each type of

agricultural business involved in economic links

+ The criterion that reflects the degree of satisfaction of linking needs between

the capital and its neighbouring provinces, which includes: (1) The degree of the

neighbouring provinces’ meeting the capital’s needs of farm produce It is

calculated by the total amount of farm produce of each type to be consumed by the

neighbouring countries over the total need of farm produce by the capital (2) The

capital’s degree of supporting its neighbouring provinces’ agriculture, which is

seen in such types of need as of capital, science and technology, managerial

coordination…

+ The criterion that reflects the effectiveness of agro-economic links, which

includes: (1) The criterion of overall economic effectiveness that is seen in its

subcriteria of farm produce supply, treatment of environmental problems… (2) The

criterion of effectiveness enjoyed by each party involved in a link, which can be

seen in its increased turnover and profit of that party after involving in a link

2.2 The practical background for agro-economic links between Hanoi and its

neighbouring provinces

After studying agro-economic links between the capitals of China, Japan,

Thailand and Ho Chi Minh City with their respective neighbouring provinces, this

dissertation draws a number of lessons that can be applied to agro-economic links between Hanoi and its neighbouring provinces:

First, all of the cities in question are based on their respective regional and agricultural planning for their links so that they can identify potentials and advantages of agricultural development and areas that can be mutually complemented, through which to identify link focuses

Secondly, the role of state management in agro-economic links, expressed in its establishment of a proper economic and legal environment for the links

Thirdly, agro-economic links are realized by agro-economic parties If a country’s policies focus on improving the parties’ capacity in all aspects, those links will take place spontaneously and highly effectively

Thứ tư, agro-economic links between a capital and its neighbouring provinces promote the principle of voluntariness on one hand and, on the other hand, the capital agriculture should be proactive in those links If a country could deal with this issue well, agro-economic links will take place proactively and thus result in higher achievements

CHAPTER 3 THE REALITY OF AGRO-ECONOMIC LINKS

BETWEEN HANOI AND ITS NEIGHBOURING PROVINCES 3.1 Natural, economic and social characteristics of Hanoi and its neighbouring provinces that affect economic links

This dissertation has looked at the natural, economic and social characteristics

of Hanoi and its neighbouring provinces that affect economic links, based on which

it has found out both positive and negative influences:

- Advantages and needs of links: (1) As the national political, cultural, and economic centre, Hanoi has required the other provinces to support it attentively

Its neighbouring provinces have both their respective advantages and responsibility for Hanoi

(2) The terrain and river system in the Red River Delta stretch from northwest

to southeast, increasingly downward through Hanoi and its neighbouring provinces

Therefore, their agricultural production and water exploitation must be cooperated

(3) The resource relationship, especially that between land and population, of Hanoi and its neighbouring provinces is so improportional that it provides a favourable condition for Hanoi and its neighbouring provinces’ cooperation in agricultural development, especially in production and consumption of farm produce

(4) Hanoi’s market has a high purchasing power and requires high-quality produce The link between production and consumption is increasingly so close that its agriculture, especially its farm produce consumption, must be increasingly closely linked to other provinces’ production, processing and transport

(5) Both the positive and negative influences of industrialization and

modernization require Hanoi and its neighbouring provinces to mutually solve

them successfully

- Difficulties against agro-economic links: (1) Hanoi’s boundary expansion has

increased both the size and complicatedness of those links

(2) The speedy industrialization and modernization processes both result in

pressure of dealing with problems in links that require big resources to conduct and

much effort to overcome big consequences

(3) The development of a market economy, with an aim to gain profit, may

make producers abuse fertilisers, insecticides, vetenary medicine, and man-made

animal food that may negatively affect farm produce quality and thus give pressure

on agro-economic links between Hanoi and its neighbouring provinces

(4) The knowledge, especially that of international integration and legal issues

on economic matters of the inhabitants, especially thos in Hanoi’s neighbouring

provinces, remain limited

3.2 Overview of agricultural development in Hanoi and its neighbouring

provinces since Vietnam’s renovation

3.2.1 The agricultural growth rate of Hanoi and its neighbouring provinces: Prior

to the year 2000, Hanoi expanded its boundary to include some districts of the

(former) province of Ha Tay before it contracted itself Between 2000 and 2007,

Hanoi’s farming activities were mostly found in five of its districts (i.e Sóc Sơn,

Đông Anh, Từ Liêm, Thanh Trì and Gia Lâm) Having limited resources, especially

limited farming land that decreases at 1% per year, Hanoi’s agriculture keeps

developing and growing at 1.87% per year and still plays an important role in the

capital’s economic structure

Hanoi’s neighbouring provinces enjoy higher growth rates than the capital The

five provinces reach an average growth rate of 4.34% per year in value of

agriculture production, with Bắc Ninh having the lowest annual rate of 2.65% and

Thái Nguyên enjoying the highest rate of 6.53%

Between 2008 and 2012, after expanding its boundary, the capital had much

more resources and thus gained an average growth rate in that period slightly more

than twice as high as that gained between 2000 and 2007 (i.e 3.78% per year and

1.87% per year respectively) Though Hanoi had three more neighbours (i.e Phú

Thọ, Hà Nam and Hòa Bình) in exclusion of one (i.e Hà Tây), its neighbouring

provinces enjoyed a mere average growth of 3.54 % in this period Noticeably,

their agricultural production value went down from 8.65 times in 2007 to merely

twice as much as that of Hanoi in 2012

3.2.2 The structural shifting tendency of the agriculture in Hanoi and its

neighbouring provinces

- Between 2000 and 2007: It was seen in Hanoi that the sectors of farming,

forestry and fisheries corner a very low proportion of its economy and tends to

decrease by 0.2 percent annually on average The structure of its farming, forestry and fisheries shifted positively with its breeding proportion gradually increased from 34.1% in 2000 to 37.02% in 2002 and to 47.5% in 2007; its growing sector slowly decreasing from 64.7% in 2000 to 60.5% in 2002 and 48.1% in 2007; and, farming services increasing correspondingly

Hanoi’s neighbouring provinces experienced different decreasing proportions

of farming, forestry and fisheries The changes of the proportion of farming, forestry and fisheries in the direction and at the rate mentioned above formed the relationship of those fields between Hanoi and its neighbouring provinces and provided a quantitative demonstration of the needs to link different provinces in he region

- Between 2008 and 2012: Hanoi enjoyed a quite big increase of resources thanks to its boundary expansion during the period The share of its agriculture, forestry, and fisheries within the capital’s economic structure thus increased (6.6%

in 2008 from 1.75% in 2007), but the proportion then quickly went down to 5.2%

in 2012

- Hanoi’s boundary expansion made two additional provinces become its neighbours (from five to seven provinces) and thus changed the share of agriculture, forestry and fisheries in the overall economic structure of its neighbouring provinces As a result, the structural contrast between Hanoi and its neighbouring provinces has experienced little change

3.2.3 Sectoral development in agriculture of Hanoi and its neighbouring provinces

- Hanoi: The capital’s crop structure has shifted towards cash-crop products Its high-quality production area has gradually grown; production of vegetables has increased quite much with an initial results of some areas specialized in safe vegetables, flowers or fruit; and, some high-tech models have been introduced Though the scale and size has been decreasing, the production value of the crop production sector keeps increasing, though at moderate rates

The livestock sector grew quite positively between 2000 and 2005 and slowly from 2006 to 2012 There have been some centralized livestock models, but environmental pollution and disease control are urgent issues Hanoi’s fisheries has developed quite well Some one-crop rice-growing and low areas have been transformed into fisheries-based models or those with one rice crop and one fishery crop a year As a result, the capital’s fishery production has increased not only because of its boundary expansion but also because of the sector’s growth in the following years In contrast, Hanoi has a limited forest area, and its forestry grows quite moderately

- Hanoi’s neighbouring provinces: The provinces’ crop production sector has also shifted towards more production effectiveness and goods production As a result, rice production tended to reduce while farming of vegetables, bean, industrial plants and cash-crop plants tends to grow

Strong shift from crop production to livestock husbandry, together with strong

promotion of raising pigs, poultry, cattles, and specialty animals, has provided

Hanoi and its neighbouring provinces a new growth (the dissertation has conducted

in-depth analysis of each type of major products in the neighbouring provinces and

compared the agricultural development of Hanoi and the provinces in the region)

3.2.4 Assessment of the possibility of agro-economic links between Hanoi and its

neighbouring provinces

- The capacity of farming production versus the needs of farm produce of

Hanoi: Hanoi’s agriculture can just meet 69% of its own need of cattle meat; 32%

of its need of fish; 84% of its need of eggs; 19% of milk; 38% of rice; 33% of fresh

vegetables; 18% of fresh fruit Hanoi therefore becomes an ideal farm produce

market for its neighbouring provinces, which have a geographical advantage over

other provinces If this advantage is taken, the neighbouring provinces’ agriculture

will have a large-enough market, which is among the burning issues of Vietnam’s

agriculture

- The relationship between the supplying neighbouring provinces and Hanoi:

This is seen mainly in their supply of food and foodstuff to the capital and the

latter’s transfer of technology, seeds, breeds, etc which possess the following

characteristics: (1) The capital’s increasingly higher demands in terms of quantity,

quality and type; (2) Issues of food hygiene that requires increased coordination in

supervision; and, (3) Increased competition due to international integration

Besides, green rings, detention reservoirs, and exploitation of Hanoi’s strengths are

also issues of potential links

3.3 The reality of agro-economic links between Hanoi and its neighbouring

provinces during modernisation

3.3.1 The development reality of agro-economic links between Hanoi and its

neighbouring provinces prior to the year2008

- Before 1990 (Hanoi made up of 11 districts and one town): This period saw

many boundary changes, so Hanoi’s suburban expansion can be seen as

agro-economic links in those years Though links were conducted directly through

administrative-economic measures within a province or city (along with a subsidy

mechanism and local protectionism) Direct links between Hanoi’s agricultural

businesses and those of the other provinces and cities in the same region were rare

- Between 1991 and 2000: Hanoi’s boundary was changed again in 1991 with

the transfer of the five previous districts and one town (formerly taken from Hà

Sơn Bình province in 1978) to Hà Tây and of Mê Linh district to Vĩnh Phú Hanoi

then had only four inner and five outer districts, with a natural landmass of

924 km² The administrative boundary change and, especially, the shift from the

centrally planned economic management to a market mechanism accordingly

changed the agro-economic links between Hanoi and its neighbouring provinces

(1) Economic links through macro-economic management activities: Those links are seen in general plannings of the Red River Delta, Hanoi and its neighboring provinces, which was symbolized by the establishment of the Research Centre for the Red River Delta and the implementation of the Overall Planning for Socio-economic Development of the Red River Delta in the period of 1996-2010, which mentioned various issues of the region and links between the provinces in the same region

The overall planning for socio-economic development of Hanoi and its neighbouring provinces mentioned links in socio-economic development between the capital and the provinces and cities in the Red River Delta and its neighbouring provinces

The ideas and guidelines mentioned in those plannings had been carried out

Noticeably, the main issues mentioned by the agricultural planning of Hanoi and its neighbouring provinces had been gradually deployed with quite good results

(2) Economic links betwwen agricultural businesses:

There were links in production and supply of farm produce, transfer of scientific and technological advances … specifically as follows:

+ There were models of links between Hanoi’s agricultural business with the provinces in the same region such as the investment waves of Hanoian residents in the provinces of Vĩnh Phúc, Hà Tây, Bắc Ninh, and Hưng Yên for development of farm economy; cooperation between producers and especially processors of Hanoi with producers of the regional provinces such as links between Hanoi’s green rice flake producer with those in Hà Tây, Hưng Yên, Thái Bình, Nam Định in supply of input sticky rice

Table 3.1: Quantity of some farm produce and related goods supplied by the

neighbouring provinces to Hanoi, period: 1995-1998

Unit: ton

1 Food (in rice terms) 349,923 358,910 369,235 380,500

2 Fresh vegetables 160,928 165,063 170,025 175,000

Source: Hanoi Department of Trade

+ There were models of links in supply of farm produce: This type of agro-economic link between Hanoi and its neighbouring provinces was most popular during this period though those links came quite spontaneously from the parties’

benefits in exploiting the capital’s market The links in supply of farm produce for Hanoi have been diverse in form and active in action However, the supply of farm

produce from the neighbouring provinces to Hanoi was mainly dominated by the

private sector, especially by small business people

+ In terms of science and technology, Hanoi started having agricultural

research models, but transfer of scientific and technological advances remained in

the form of its study visit by its neighbouring provinces while cooperation for

transferring those advances to the provinces weren’t carried out

- Between 2001 and 2007: This period witnessed a very rapid urbanization in

Hanoi with the establishment of new districts of Cầu Giấy and Thanh Xuân in 1997

and Long Biên and Hoàng Mai in 2005; various new industrial zones in Đông Anh,

Sóc Sơn, and Gia Lâm districts reduced the size of agricultural production These

new developments put pressures on promoting agro-economic links between Hanoi

and its neighbouring provinces; therefore, the agro-economic links between Hanoi

and its neighbouring provinces had had certain changes compared to the previous

period, specifically as follows:

(1) Issues of agro-economic links between Hanoi and the provinces in the

metropolitan zone, especially those being adjacent to it, continued to be realized in

Plannings of the Hanoi Region and General Plannings of Hanoi and Its

Neighbouring Provinces It is worth noting that the central role and the initiative of

Hanoi had been appreciated in such links

(2) Activities of link establishment through state management documents were

in an initiation stage with only a few cooperations established between Hanoi and

its neighbouring provinces Most contents of such cooperation remained in written

plans Hanoi at that time had bigger and wider plans of cooperation such as with

Lâm Đồng and Thanh Hoá, or in rice growing with Mozambique… while it paid

little attention to cooperation with the provinces within the Hanoi Metropolitan

Zone, including its neighbouring provinces

(3) Economic links between businesses: These are the most vibrant links which

had new progress compared to the previous period, among which the typical

examples were as follows:

+ The previous waves of investment in farm-economy development were

replaced by Hanoi’s real business and investment activities in the fields of

agriculture, forestry, and fisheries in other provinces, including its neighbouring

provinces such as investment in flower growing in Vĩnh Phúc, Hưng Yên…,

investment in fisheries in Hưng Yên and Bắc Ninh, investment in farm produce

processing such as Anh Thái Poultry Factory in Hà Tây with gradual developments

+ Linked supply of farm produce increased in quantity of farm produce and

number of supply forms This was still the most vibrant form of the agro-economic

links between Hanoi and its neighbouring provinces at the time As a result, the

size of farm produce supply had increased

+ Links in transfer of scientific and technological advances developed in two

aspects: both simultaneously by agricultural businesses and proactively by state

management agencies and farm extension organisations

Table 3.2: Hanoi’s Need and Neighbouring Provinces’ Supply of Farm

Produce to Hanoi in 2005

Unit: ton

No Type of farm product Hanoi’s need Hanoi’s

production production Provinces’

Source: Hanoi Department of Commerce

General assessment: Before 1990, agro-economic links were conducted

directly through administrative measures Between 1990 and 2000, the links between Hanoi and its neighbouring provinces had new opportunities and developments in the aspects of state management and business activities Relationships in fact expanded, together with the market economy mechanism, with more forms of link than the previous period

From 2001 to 2007, demands of agro-economic links between Hanoi and its neighbouring provinces kepts increasing However, the links had not had qualitative changes, and spontaneous links between agricultural businesses remained dominant

3.3.2 The development of agro-economic links between Hanoi and its neighbouring provinces between 2008 and 2012

This period witnessed a boundary expansion of the capital with its landmass increasing to 3.6 times as large and its population to 1.8 times as big Because Hanoi’s suburban districts increased from five to eighteen, the city’s agricultural production correspondingly increased in size It was a fact that the agro-economic links between Hanoi and its neighbouring provinces remained in two scopes: links

in state management activities and those between producers, businesses and service providers However, the links changed complicatedly in both positive and negative directions, specifically as follows:

- Links in state management activities: + In this period, Hanoi and its neighbouring provinces reviewed their plannings and organized planning for the period of 2010-2020 with the vision to the year 2030 or 2050 In those plannings, they all identified their targets, directions of resource uses, development of agricultural services, and arrangement of agricultural development projects in mututal relationships Agro-economic links were realized in their identification of agricultural functions of each province within the region and, especially an emphasis on the role of agriculture in the general development of the region

In its planning, Hanoi identified its agricultural development through formulation of intensive production areas, green and ecological rings, and high-tech

agricultural zones Its neighbouring provinces’ plannings all mentioned agricultural

production of goods and considered Hanoi as a potential market

Agro-economic links between Hanoi and its neighbouring provinces in their

respective plannings were still paid attention to Those attentions were not only

seen in planning directions but also in provision of projects on arrangement of

agricultural production in those provinces Examples include Hưng Yên province

with an emphasis on bonsais and flower growing in its district of Văn Giang, on

centralized zone of pig raising in its district of Khoái Châu; Hà Nam with an

emphasis on poultry raising, and high-quality rice growing …

+ Hanoi improved its initiative in policy-making and control and supervision of

farm produce circulation The city issued policies to enhance links in supervision ò

farm produce circulation and disease control Noticeably, Hanoi managed to sign a

cooperation programme in prevention and control of diseases, control of animal

slaughtering, animal products and production and consumption of safe vegetables

with 16 other provinces and cities in North Vietnam

In deploying the programme, Hanoi Department of Agriculture and Rural

Development provided information on trade and investment promotion and

cooperation between Hanoi and the other signing provinces in order to inform

organisations, businesses and individuals in need of such information Hanoi

received information from five other signing provinces on their agricultural

development programmes, supporting policies, high-tech business models, and

provincial agricultural businesses in need of product promotion

- Agro-economic links between businesses: This form of link still remained

dominant among the agro–economic links between Hanoi and its neighbouring

provinces However, there were new forms and natures of those links, specifically

as follows:

+ Investment links in production and business came to a stop because previous

investments in farm economy development were actually those in properties, and

Hanoian investors in the neighbouring provinces all fled when real estate business

went down, with nearly no more new investments in the field In addition, Hanoi’s

real investments in other provinces’ agricultural business decreased due to a lack of

cohesion between respective parties and an absence of a proper economic and legal

environment because those links were mostly spontaneous Those investments were

mainly in high technology for hygienic farm produce

However, there were then forms of agricultural production in the neighbouring

provinces that were specialized in supply Hanoi with farm produce They could be

seen as deployment of the neighbouring provinces’ agro-development planning

with considerations of Hanoi market’s characteristics Examples were peach flower

and kumquat plant growing in Văn Giang; safe vegetable growing in the communes

of Yên Phú and Hoàn Long, Yên Mỹ district, Hưng Yên province or in Trung

Nghĩa commune, Hưng Yên city; or high-quality rice growing in Hà Nam

The dissertation has conducted a quite thorough survey of those models in the provinces of Hưng Yên, Bắc Ninh, and Hà Nam and found out that producers in the neighbouring provinces held initiatives in agro-economic links under those models Those producers deployed the provinces’ plannings with consideration of Hanoi’s market while Hanoi did not really trigger their activities The tendency formed sources of farm produce from the neighbouring provinces to Hanoi, but with arisen problems of food hygiene in the following stages because Hanoi could not supervise them from their origin

+ The links in farm produce processing and consumption remained in two major forms: fresh products for consumers’ processing and use (e.g fresh vegetables, fish, live poultry …) and processed or preliminarily treated products for consumers’ continued process and use The links were conducted through many channels and by many processors and sellers Compared to the previous period, this form was still the most dominant, diversified, and effective one, yet also with many negative issues The specific links during that period were as follows:

1) Direct links between small producers in the neighbouring provinces and farm produce retailers in Hanoi: The small-scale producers in the neighbouring provinces, active to some degree and accounting for 5 to7%, had relatives living in the capital or had vehicles to directly transport their farm produce to retailers in contact markets or retail markets They could supply very small amount of farm produce such as 30 to 50 kg of poultry or fish, 50 to 70 kg of vegetables, fruit, fresh flowers and bonsai … Their major means of transport was the motorbike, and their buyers were familiar retailers

2) Links between provincial producers and groups of Hanoian consumers: This type of link existed between consumers in one office or residential area with farm producers in their home country, mainly in Hanoi’s neighbouring provinces The former ordered the latter to produce and transport farm products to Hanoi for their office- or neighbourhood-based consumption This type of link was spontaneously and orally made between the consumer and the producer because the state management of food hygiene control played a loose role

3) Links between provincial producers and farm produce collectors, processors and retailers: This channel of distribution is a link throughout a chain of farm produce value It was quite popilar in the links between farm production and consumption between Hanoi and its neighbouring provinces Under such a link, a producer sold farm produce to a collector who in his turn sold them to processors of pog, beef, buffalo meat, and poultry and to preliminary processors of vegetables and bean; large-scale processed products were then distributed to retailers who would in turn sell them directly to end-users

A dominant advantage of this type of link is that they are large-scale ones with highly specialized linking parties However, its biggest limits are its many

intermediate stages that raise the price and the difficulty in control of farm produce

hygiene (it was a fact that food hygiene was seriously violated)

Table 3.3: Collective investigation of farm produce supply at four contact

markets in Hanoi, May 2013

Product Province of

origin

Daily quantity (kg/piece)

Monthly quantity (kg/piece)

Monthly turnover (million VND)

Means of transport

Bắc Giang 30 - 40 800 - 1,200 40 Motorbike

4 Vegetables

Vĩnh Phúc 60- 500 1,500 - 9,000 20.0 - 45.0 Motorbike, coach

Thái nguyên 150-200 450 – 2,000 20.0 - 48.0 Motorbike, coach

Hòa Bình 300 3,600 - 7,500 35.0 - 200.0 Motorbike, coach

Hưng Yên 50 - 350 800 – 4,400 25.0 - 56.0 Motorbike, coach

Source: Interviews and investigation of private traders at four contact markets

in Hanoi 4) Other links: examples of them include those to realize the Price Stabilisation

Programme for Necessities and Hanoi’s farm produce, and activities of some

Hanoi-based central farm produce businesses and those of local businessses

3.3.3 Achievements, limitations, and issues to be settled of agro-economic links

between Hanoi and its neighbouring provinces

- Achievements:

(1) The agro-economic links were available in every development stage of

Hanoi and its neighbouring provinces’ agriculture The degree of cooperation has

been increasingly growing along the process from self-subsidy agriculture to

production of agricultural goods

(2) There have been changes in those links and their methods of

implementation, which can be seen in administrative measures that formulated

foodstuff rings, circulation and sale of farm produce through purchase from

farmers, the planning of farm-specialized regions, free circulation of farm produce,

and market-based consumption of farm produce

(3) There have been initial changes in organization of links between the state management of agriculture between Hanoi and its neighbouring provinces (4) There have been proactive cooperations in farm production between the neighbouring provinces, which were seen in their selection of production sectors, especially in their orientation of quality criteria that met Hanoi’s requirements and tastes such as super-lean pog, high-quality farm produce, etc

(5) The supply system of farm produce for Hanoi has been expanding to meet Hanoian people’s need satisfactorily and even plentifully, both during the year and during the New Year holiday As a result, Hanoian inhabitants’ need of farm produce has been sufficiently met in quantity terms and increasingly satisfied in quality terms while farmers in the neighbouring provinces could sell their produce

at high prices with little left unsold because Hanoi’s market had a big demand and purchasing power

(6) The agro-economic links have favoured producers, processors, and suppliers in the neighbouring provinces as well as distributors and, especially, consumers in Hanoi Those links have also helped producers turn to cash-crop plants and animals and thus have higher turnover and profit: their turnover increased at 20% to 30% per year; their price-based profit 3 to 5% per year The links have provided Hanoian processors and distributors with stable and high-quality input so that both the processing capacity and the processing quality have been improved, and their turnover and profit have grown, too

- Limitations and issues to be settled: Apart from the above-mentioned achievements, the agro-economic links between Hanoi and its neighbouring provinces still suffer from the following basic limitations:

(1) Although the need of agro-economic links between Hanoi and its neighbouring provinces appeared even during the days of the centrally planned economy and has been increasingly urgent, deployment of those links in macro management terms has been extremely slow In addition, the links were unstable and mainly orally made Some links were made into contracts but their legality and legal implementation remained weak, and the different forms of business cooperation had no economic basis for their survival

A major cause stemmed first from governments and linking parties’ vague and incorrect awareness of the need, role, and benefit of agro-economic links between Hanoi and its neighbouring provinces It also came from people’s low awareness and sense of the law as well as from a slow awareness of Hanoi’s proactive role in organization of such links and treatment of arisen relationships during their implementation As a result, to improve awareness of such links and sustainable implementation of them is an urgent need

(2) The forms of economic links remained quite preliminary Joint-ventures and business contracts were rare and unstable The past links were often on a small