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Urbanization and income growth within developing countries have created large markets for meat, milk, fish, fruits, and vegetables, while trade liberalization and foreign investment have connected farmers in developing countries with high-income consumers in other countries. In the first half of the 1990s, the International Food Policy Research Institute (IFPRI) carried out a series of studies on the impact of agricultural commercialization on farm income and nutrition, finding that the effects were generally positive. More recently, IFPRI research explored the “livestock revolution” and its effect on small farmers, as well as the dramatic growth in international trade in fish and seafood, in which developing countries play an increasingly important role. This report continues IFPRI’s research into high-value agriculture, examining income diversification and its contribution to poverty reduction in the Northern Uplands of Vietnam, the poorest region of the country. Three aspects of the approach used in this study merit attention. First, unlike many studies of income diversification that use cross-sectional data, this study looks at household-level changes in income sources over a period of rapid economic growth. Second, this study makes use of both qualitative and quantitative data, combining information from three nationally representative household surveys, secondary data, and surveys of farmers and local officials to better understand their perceptions of the relationship between income growth, diversification, and poverty reduction. Third, the report presents a new method for measuring the contribution of diversification into higher-value crops to income growth for different types of households. The results indicate that rural households in the Northern Uplands have participated fully in the economic growth of Vietnam, though poverty remains high. Income growth among rural households has occurred through proportional increases in crops, livestock, and nonfarm income. Surprisingly, poor rural households have benefited largely from crop income growth. Furthermore, yield increases account for the largest share of crop income growth, particularly among the poor. Crop diversification played a relatively small role in rural income growth in the Northern Uplands, though it accounted for more than 25 percent of the crop income growth in other, more commercialized, regions. Local authorities manage a range of programs aimed at promoting new crops. Marketing problems with these new crops are common, however, suggesting the need for greater attention to marketing and profitability. IFPRI continues to carry out research on the potential for high-value agriculture to reduce poverty in developing countries. In particular, IFPRI is examining institutional mechanisms to link farmers, processors, and buyers with the aim of helping the poor participate as producers, laborers, and consumers in rapidly growing markets for high-value agricultural commodities.

Information on the spatial distribution of poverty is particularly useful in designing geographically targeted programs to address regional disparities—a matter of high priority for many countries. Until recently, most developing countries were forced to design these programs based on rough indicators of poverty or on the results of household budget surveys, which typically generate poverty estimates for a limited number of regions. In the late 1990s, a new approach was developed combining census data and household budget survey results to generate poverty estimates for small areas such as districts, allowing the construction of “poverty maps.” A1998 IFPRI study in Vietnam was one of the first to experiment with this approach. A similar method was concurrently developed and subsequently refined by researchers at the World Bank. Poverty mapping studies have now been carried out in more than a dozen countries. This is an example of how an international public good can evolve from a set of specific country studies by the broader research community. This report uses data from the 1998 Vietnam Living Standards Survey and the 1999 Population Census to estimate various measures of poverty and inequality for 614 districts in Vietnam. The results confirm conventional wisdom regarding high rates of poverty in the upland areas, low rates in urban areas, and intermediate rates in the irrigated lowland areas. But the results also offer some surprises, such as the fact that most poor people in Vietnam do not live in the poorest areas. The study goes a step beyond standard poverty-mapping analysis by investigating the geographic determinants of district-level poverty rates. Distance to cities, soil type, and topography are significant predictors of local poverty rates. Surprisingly, proximity to small district centers is a stronger predictor of poverty than distance to large cities or distance to roads. Thus, rural-urban linkages at a local level matter a great deal for poverty reduction. At the national level, this report provides valuable information for more precise geographic targeting of poverty assistance in Vietnam, and also offers insights into the geographic factors that contribute to rural poverty. Statistical authorities in Vietnam are now experimenting with variants of this method for use in poverty monitoring. The study demonstrates the rewards that come from combining survey data, census data, and geographic data to focus on the challenge of reducing rural poverty. IFPRI continues to pursue this line of research, having recently carried out poverty-mapping analyses for Mozambique, Malawi, and Zambia.

Economic reforms in Tanzania have resulted in low inflation and solid economic growth, but many observers question whether the standard of living of ordinary Tanzanians has improved. Furthermore, there is a strong suspicion that the benefits have been concentrated among the urban population and among rural households with good market access, leaving remote rural households behind. In this paper, we demonstrate a new approach to measuring poverty trends over time. First, the relationship between poverty and household characteristics is estimated using household budget survey data. Second, this relationship is applied to the same characteristics in Demographic and Health Surveys, four of which have been carried out in Tanzania. The results suggest that the headcount poverty rate has declined by almost 9 percentage points over 1991-2003. The percentagepoint decline has been similar in rural and urban areas. Although remote rural areas tend to be poorer than other rural areas, there is no evidence that remote areas have gained any less than other rural areas in terms of poverty reduction.

In Tanzania, as in many other developing countries, the conventional wisdom is that economic reforms may have stimulated economic growth, but that the benefits of this growth have been uneven, favoring urban households and farmers with good market access. This idea, although quite plausible, has rarely been tested empirically. In this paper, we develop a new approach to measuring trends in poverty and apply it to Tanzania in order to explore the distributional aspects of economic growth and the relationship between rural poverty and market access. We find that, between 1991 and 2003, a period of extensive economic reforms, the overall rate of poverty fell about 9 percentage points. The degree of poverty reduction was similar between rural and urban areas, though poverty appears not to have declined in Dar es Salaam. The poverty rate fell more among households with a less educated head of household than among those with a more educated head. The gains were greater among male-headed households than female-headed households. We find that rural poverty is associated with remoteness, but the relationship is surprisingly weak and it varies depending on the definition used. Rural poverty is more closely related to access to regional urban centers than distance to roads or to Dar es Salaam. We find little evidence that remote rural areas are being “left behind” in terms of the absolute decline in the poverty rate.