Income Diversification And Poverty Reduction In The Northern Uplands Of Vietnam

In the context of the economic development, income diversification is sometimes defined as the process by which households switch from growing low-value staple food crops to growing a mix of food crops and higher-value commercial crops (crop diversification) and from farming to non-farm activities (non-farm diversification). The literature on income diversification has measured trends, identified determinants, and speculated on the constraints to diversification, but there has been relatively little analysis of the contribution of diversification to income growth. This paper uses household survey data from 1993 and 1998 to quantify the contribution of crop diversification and non-farm diversification to the growth of household income in the northern upland region of Vietnam. We find that rural incomes have increased substantially over this period, but non-farm income has increased at the same rate as farm income. Poor households are particularly dependent on crop income growth, while higher-income households rely more on non-farm diversification to increase their incomes. Crop diversification has made a non-negligible contribution to rising living standards in the northern uplands, but the contribution of yield growth is substantially greater. Crop income growth among poor households is based heavily on yield increases, while income growth among richer households is associated with area expansion and crop diversification. These results have implications for policies and investment to improve rural living standards.