Academic journal article East Asian Economic Review

A Comparative Study on the Self-Help Approach in Rural Development between Vietnam's New Rural Development and Korea's Saemaul Undong *

Academic journal article East Asian Economic Review

A Comparative Study on the Self-Help Approach in Rural Development between Vietnam's New Rural Development and Korea's Saemaul Undong *

Article excerpt

I. INTRODUCTION

Rural development has always interested policymakers, scientists and experts in both developing and developed countries. Since the introduction of Vietnam's Doi Moi policy in 1986, Vietnam has witnessed high economic growth accompanied by rapid urbanization. According to the General Statistics Office of Vietnam (GSO, 1990 and GSO, 2010), however, the percentage of total Vietnamese living in rural areas decreased from 80.7% to only 69, 5% in 2010-about 0.8 percentage points per year. This has raised significant concerns about the pace of improvements in living standards in rural Vietnam. In 2010, the average income of rural people was approximately USD $80, two times lower than that of urban inhabitants, while the poverty rate in rural areas was 17.4%, four times higher compared with urban areas (GSO, 2011). Additionally, rural people in Vietnam have limited access to adequate infrastructure and high-technology farming methods, and human resource quality remains low. These have been barriers to improving quality of life in rural areas.

The Government of Vietnam's National Target Program on New Rural Develop ment (NRD) for 2010-2020 is one of 16 National Target Programs. Mr. Le Huy Ngo, Minister of the Ministry of Agriculture and Rural Development (MARD), initiated NRD, which aims to develop Vietnam's rural economy and improve the living standards of rural people. After nearly five years, NRD has improved quality of living for rural people by some measures. According to GSO (2014), the average income of rural people increased 1.9 times compared to 2010, and the rate of poor households decreased 1.65% per year during 2010-2014 to 10.1%. In addition, the program has upgraded infrastructure with more than five thousand construction sites nationwide. However, the gap between the program's targets and actual outcomes is wide. Two main reasons are the lack of investment capital and the ineffective mobilization of community involvement, problems common to many developing countries.

Capital allocated for NRD programs from 2011-2014, of about USD 23 billion, represented 25% of the total capital allocated for the program. Loans make up the biggest part, accounting for 57.2% of total capital, with community contributions totaling only 10% (MARD, 2015). We found that a large number of rural people have not even heard about NRD, implying that external resources play a significant role in NRD implementation. Rural inhabitants should have ownership of NRD, according to the slogan of the program: "People know, People discuss, People do, People monitor for the benefit of rural people themselves". This is similar to the slogan of the Saemaul Undong movement (SU) in Korea, where the slogan "Diligence, Self-help and Collaboration" encouraged people to participate proactively in rural development.

One way to foster the success of the NRD program is to better mobilize internal resources, especially community contributions, because there is little room for mobilizing resources from the state budget due to a high budget deficit and public debt. Currently, the budget deficit is above 5.7% of GDP, higher than the planned objective of 5% of GDP; public debt has increased quickly to 61.4% in 2015 (Vietnam National Assembly, 2015). The trend will further continue, driving the top concern of the Vietnamese government. Capital mobilization from the private and foreign direct investment (FDI) sectors will face many difficulties due to high risk, as well as the low and slow returns from agriculture and rural development investment. Meanwhile, resources within households have not been effectively utilized. Moreover, the household saving rate has been relatively high, at 14.4% GDP in the period 2011-2015 (Vietnam National Assembly, 2015) and according to the Central Institute for Economic Management (2012), about 60% of rural households have their own savings fund. Therefore, in the case of Vietnam, one solution is to mobilize community contribution for the successful implementation of the NRD movement. …

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