Ministry of Planning and Investment Department of Statistics Impact of fglobal lfinancial i and Economic Crisis on Poverty Lao CBMS Sites 9 th Poverty and economic policy (PEP) research network policy conference, Angor Era Hotel, Siem Reap, Cambodia December 5-9, 2011 Presented by MR. Vilaysook SISOULATH
What is Lao CBMS In order to achieve the MDG of the country, especially to reduce poverty alleviation by 15% in the year 2015. To achieve this government s strategy the National Growth and Poverty Eradication Strategy gy( (NGPES) was developed and adopted by National Assembly during 2001. In the implementing and monitoring of the NGPES there is demand on information of the poor especially at the community level. To measure the social and economic performance of the country as well as NGPES it is required to have a set of data and information which reflect the results of socio and economic performance in different level, particularly at the unit of implementation. The monitoring in Lao PDR has introduced the bottom-up approach system using the community based data collection or Village Book System and the Lao Expenditure and Consumption Survey for poverty monitoring for national level.
Objective of CBMS To provide the basic socio-economic data at community and village level in order to monitor and evaluate the poverty. To support the implementing of village book. To strengthen the capacity of local people data collect ion, data compiling, data reporting and data analysis. The result from data collection will be used to monitor and evaluate the poverty and socio-economic development at locality.
CBMS Site Location CBMS SITE LOCATION SEPONE SAVANNAKHET Vietnam TOOMLARN Thailand SARAVANE PAKSE Country border Province border District border Roads Mekong river
Research Paper On Impact of Global l financial i and Economic Crisis on Poverty Lao CBM Site
Introduction Since 2007 the economic growth of Lao PDR is slightly declined. In 2006, the growth rate is 8.3% and down to 7.9%, the trend seems to decrease in 2008. Government of Lao PDR has tried to maintain the stable growth. The expectation the economy will grow and meet the target 7.9% infiscal year 2008-2009 & requires all investment which accounted about 30% of GDP in order to keep the satisfied growth of economy. Although the majority of Lao economy has based on agriculture sector; however service sector and other foreign and private investment has also played an important role in gaining the value added and directly raising Lao economy There is a concern that the impacts from the global financial and economic There is a concern that the impacts from the global financial and economic crisis may hit the developing countries and including the low income country like Lao PDR.
Introduction. Conti
Objectives Overall objective To address the issue of the effect of the global lfinancial i crisis i which may affect the poverty or household welfare, in order to inform the policy making person to understand it and prepare to respond when it hit the country Specific objective To find out the effect of the GFC on household poverty
Conceptual framework. Global Financial Crisis Exports FDI Remittances Asset Values Aggregate Demand Cost of Capital Employment Employment Earnings for level composition changes given job Joblessness Working poor Labor income Household Consumption Non-labor income/wealth Source: WB
Research question 1. What is the impact of GFC on household poverty? 2. What is socio-economic condition and its affect to poverty of household?
Methodology 1. Data source and dlocation CBMS was used as source of data for finding and monitoring. Three villages of Savannakhet province (Dansavan, Phonemuang and Sonemeexay) was assigned for data collection. 718 households were interviewed
Methodology Conti.. 2. Data analysis Consumption and expenditure were used as welfare indicator to measure the poverty. National poverty line based on Decree number 285/MP was applied. Two module were produce The first model tested the relationship of some socio-economic variables and poverty The second model include some outcome variables from the global financial crisis, the interest focus at whether the outcome variables of the global financial crisis will give any positive effect on poverty while having the socio-economic i as control
Results & Discussion
I. Social-economic Table1 : Village general information Villages Population Household size Female Male Total Number of HH Agricultural Household doing handicraft Market Health care centre Phonemuang 680 673 1353 5.7 238 84.50% 3.80% Yes Yes Sonmixay 443 440 883 5.5 161 99.40% 0.60% Yes Yes Dansavanh 946 971 1917 6 319 99.70% Non Yes Yes Total 2069 2084 4153 5.7 718 94.60% Most of the household are based on agricultural production. All people have fully access to market and full access to health care center
I. Social-economic. Conti Most people in each village have based on non farm professional while the unemployment rate is very low.
I. Social-economic. Conti Table2. Percent of household by housing and sanitation mean Housing Sanitation Modern Dug No Village Concrete Half wood Wooden Bamboo latrine latrine latrine Phonemuang 14.3 16.5 48.1 21.1 60.5 9.7 29.8 Sonmixay 26.3 25.6 44.4 3.8 87 5 8.1 Dansavanh 18.8 5 44.2 32 36.7 48.6 14.7 Most villagers have begun to improved housing condition, they trend to modify their shelter from temporary house to quite better in term of material. Sanitation condition has been slightly improved, however households with no latrine still remains and exist which is probably affect their health condition in the long run if the problem are not solved
I. Social-economic. Conti Table3. Water use and energy use for cooking Water source Energy use for cooking Water Bore Other Fuel Fire Other Village supply well River Water Electricity coal wood Energy Phonemuang 0 100 0 0 0 0 100 0 Sonmixay 0 100 0 0 0 0 100 0 Dansavanh 0 0.3 99.7.0 0 0 0 100 0 The Main water source of these villagers is dug well and bore hole. Just in Dansavanh 99.7 % are depending on water from river which is very terrible and harmful for people health. All village used fire wood as main
I. Social-economic. Conti Table4. Rice and other food production Village Rice production is the main source of people Rice Rice Production to escape from hunger. Big animal Poultry per Production Per capita (Tons) (Tons/person) Big animal per capita Poultry per capita In average Dansavanh has highest rice production per capital. Another source of Phonemuang 286 0.26 0.57 1.24 nutritious food is Sonmixay 52 0.07 0.54 1.58 Dansavanh 779 0.55 0.63 1.54 Almost is poultry proteins which obtain from meat and poultry.
I. Social-economic. Conti Table5. Main source of Income Village Phonemuang Sonmixay Dansavanh Main Income Source Hunting and collection of Employment State wood Household Agriculture with private works products business Other Row % Row % Row % Row % Row % Row % 14.70% 24.80% 16.40% 14.30% 29.80% 1.20% 14.30% 59.60% 12.40% 12.40% 13.80% 50.20% 2.80% 0.30% 17.60% 15.40% The income source might have already been reflected from the occupation patterns of people as The income generating activity in the villages is multiple which range from business to farm work. Employment with private and state office remark as the top one, then business and agricultural activities
I. Social-economic. Conti Table6. Property, vehicle, media receivers and communication tool possession of households Village Land House building Car Motorbike Bicycle Tractor TV Radio Mobile Phonemuang 89.5 99.2 15 79.8 57.6 30.3 74.8 33.2 59.7 Sonmixay 98.8 98.8 21 95.7 56.5 21.1 94.4 28.6 78.9 Dansavanh 82.1 97.2 17 74.3 32.6 2.2 80.3 5.3 18.8 Most of household own the land and house building in each village Another observation is the car or pick up truck also begin to grow in each village which meant the economy status of villagers is improving
I. Social-economic. Conti Figure2. Poverty level l 80.00% 74.80% 70.00% 60.00% 50.00% 00% 40.00% 30.00% 20.00% 10.00% 57.80% 61.40% 42.20% 20% 25.20% 38.60% Poverty status Non-poor Poverty status Poor About one third of household are living under the national poverty line in these sentinel villages. The figure is quite high h and higher than the national estimate, 0.00% The poor still remain high in Sonmixay and Dansavanh which is 42.2% and 38.6%.
II. Aspects for long term monitoring i of the impact of crisis i Table9. Some long term information on the out come of the Global Financial Crisis Is there any one work abroad in past Is there any one back from working Is there any currently working Village 12 months? aboard? abroad? Yes No Yes No Yes No Row % Row % Row % Row % Row % Row % Phonemuang 100.00% 100.00% 100.00% Sonmixay 100.00% 100.00% 100.00% Dansavanh 0.90% 99.10% 0.30% 99.70% 0.90% 99.10% Villagers from these sentinel sites are very less in term of working abroad. Only 0.9 % of household or equivalent to two households of Dansavanh village that their family members work in abroad.
II. Aspects for long term monitoring of the impact of crisis. i Conti Table10. Observation on the remittent and their salary Receive money Salary cut Yes No Yes No Count Count Count Count Village Phonemuang 1 6 3 235 Sonmixay 1 96 99 62 Dansavanh 2 3 23 202 It is at least one household in Phonemuang and Sonmixay village receive remittance. Many household members from these villages experienced salary cut. The situation is both from internal and external of the country.
II. Aspects for long term monitoring of the impact of crisis. i Conti Table 11. Place of work, reasons for salary cut and nature of employment Place of working Reasons for salary cut Nature of employment Reduction in Reduce Other/ company's working Don't Village Domestic Abroad income time kwon Good fairly good Phonemuang 3 0 0 0 3 0 3 100% 0 0% 0% 100% 0 100% Somixay 99 0 0 14 85 18 60 100% 0 0 14.10% 85.90% 18.20% 60.60% Dansavanh 20 3 0 0 23 2 13 87% 13% 0 0% 100% 8.70% 56.50% 50% Almost of household members are working in domestic site, there are only a few members from three households in Dansavanh village working in abroad. The reason for salary cut almost is another reason rather than reducing in company s income and working time. Working environment according to the respondent is almost fairy good.
II. Aspects for long term monitoring of the impact of crisis. i Conti The benefit received by the employed member is not changed compare to the previous situation in these three villages. There are only a few hh in Dansavanh and Phonemuang have change in benefit. There is no big effect to the changing of their benefit received
II. Aspects for long term monitoring of the impact of crisis, i Conti Table13. Job cut, work hour and credit access Villages Is there any one Is there any one Did you borrow has job cut in has working money from Almost of villagers have no experience of job loss or job cutting due to some even like the financial or economic crisis. some large Yes No Yes No Yes No percentage of money Phonemuang 100.00% 100.00% 14.30% 85.70% Sonmixay 0.60% 99.40% 100.00% 00% 26.10% 73.90% Dansavanh 1.30% 98.70% 0.90% 99.10% 13.20% 86.80% borrowing from Bank, the number might reflect investment rather than for using that money for coping with the crisis
II. Aspects for long term monitoring of the impact of crisis. i Conti Table 14.Saving in the bank and experience on losing money saved y y the bank saved Village Yes No Yes No Phonemuang 1 233 0 1 040% 0.40% 99.60% 0% 100% Somixay 3 22 0 3 12.00% 88.00% 0% 100.00% Dansavanh 32 289 1 31 10.00% 90.00% 3.10% 96.90% A little household has saving in the bank particularly in Dansavanh Sonmixay. Almost of households especially for those household who have saving in bank have no experience of losing money saved. Only one household in Dansavanh village experienced on losing money saved due to other reason rather than bank failure.
II. Aspects for long term monitoring of the impact of crisis, i Social-economic. i Conti Table15. Lack of food and young worker Village Lack of food Number of day of food hunger People below 15 work Unexpected violation Yes No Mean (Days) Yes No Yes No Phonemuang 1.70% 98.30% 3 100.00% 100.00% Sonmixay 100.00% 00%. 080% 0.80% 99.20% 200% 2.00% 98.00% Dansavanh 0.90% 99.10% 7 2.60% 97.40% 2.60% 97.40% Only little some of villager experienced food hunger in the past 12 months The length of hunger is not so long about 3 and 7 days. 2.6 % hh in Dansavanh are working at age below 15 years. There is some violation happened in two villages however the situation is not significantly high.
III. Household coping mechanism Table16. Consumption behaviors Eating behavior If so what is the behavior? Reduce rice consumption Reduce fish and meat Reduce vegetable consumption Village Change No change consumption Phonemuang 1.30% 98.70% 100.00% Sonmixay 2.50% 97.50% 100.00% Dansavanh 7.00% 93.00% 13.60% 81.80% 4.50% Almost of the household remain no change or no effect Majority of them are more likely to reduce rice, meat and fish consumption rather than other items, the reason could also be the high h price of those commodities.
III. Household coping mechanism. conti Table17. General Expenditure observation Expenditure in past Reasons 6 month HH High cost Want to Others No income of living save Vll Village Decline decline reduced Phonemuang 6.60% 93.40% 76.90% 7.70% 7.70% 7.70% Sonmixay 21.50% 78.50% 62.90% 2.90% 31.40% 2.90% Dansavanh 33.80% 66.20% 87.80% 7.10% 4.10% 1.00% 7%, 22% and 34% in those villages reduce their expenditure. Some reason is due to household income reduce while some of them want to save and some say the cost of living is high as the reason to reduce the expenditure.
III. Household coping mechanism. conti Table 18. Eating behavior and expenditure of household experienced on salary cut during past 6 months Eating behavior Expenditure in past 6 month Experience on salary cut Change Not change Decline No decline Those households experienced on salary cut more likely to change eating behavior compare to those household have no such experiences. Yes 28.60% 71.40% 20% 80% No 19.90% 80.10% 14.60% 85% expenditure Similar to total hh di
Table19. Health expenditure III. Household coping mechanism. Conti. Village Most of Households Health expenditure Reasons have their health No illness Got expenditure declined. Decline No assistance Due to have no decline illness in this past 6 Phonemuang 28.60% 71.40% 100.00% month and no any issue relating to the Sonmixay 32.30% 67.70% 80.00% 20.00% financial crisis. Dansavanh 23.90% 76.10% 67.90% 32.10%
Table20. Education issue III. Household coping mechanism. Conti Village Dropping from school in past 12 month Drop No drop Reasons No fund Help household work Phonemuang 0.00% 0.00% 0.00% 0.00% Sonmixay 000% 0.00% 100.00% 00% 0.00% 00% 000% 0.00% fund. Dansavanh 50.00% 50.00% 30% 70% 50% of household in Dansavan have at least a member of hh dropped from school. The reason 70% is help hh work while 30% has no fund
III. Household coping mechanism. Conti Table21. Credit, asset and mortgage Money borrowing Sell asset Mortgage No Sell No sell Yes No Village Borrow borrow Phonemuang 3.40% 96.60% 0.40% 99.60% 2.50% 97.50% Sonmixay 19.60% 80.40% 0.70% 99.30% 100.00% Dansavanh 10.30% 030% 89.70% 3.20% 96.80% 1.00% 99.00% Some household borrow money and the purpose has been slightly described above which may compound between investment and surviving. Highest in Sonmixay and lowest in Phonemuang villages. Almost of villagers do not sell any asset for survive while the mortgage also show less percentage only 3 percent in Phonmuang and 1 percent in Dansavanh.
Table22. Social Assistance III. Household coping mechanism. Conti Village Receive assistance Assistance from Government Yes No Receive No receive Phonemuang 100.00% 100.00% Sonmixay 4.40% 95.60% 3.80% 96.20% Dansavanh 97.40% 2.60% 98.70% 1.30% Almost all households in Dansavanh get assistance during the past 6 months while other village gets less and no any assistance from the society given to Phonmuang, it is no wonder since the situation is quite stable.
III. Household coping mechanism. Conti Table23. Work and people below 15 and over 60 years of age Village More than one job People below 15 works People above 60 works Yes No Yes No Yes No Phonemuang 100.00% 100.00% 100.00% Sonmixay 0.60% 99.40% 0 100.00% 1.30% 98.70% Dansavanh 1.90% 98.10% 2.20% 97.80% 5.40% 94.60% Almost all household have no one work for more than one job at a time. People below 15 years are less likely to work and the same to those who p y y have age above 60 year of age
IV. Multivariate results Table24. Some socio-economic factors and its relationship to pove Factors B S.E. df Sig. Exp(B) HH size 0.516 0.049 1 0 1.675 Unemployment -0.071 0071 0418 0.418 1 0864 0.864 0.931 Non-farm occupation -0.1 0.034 1 0.003 0.905 Concrete housing -1.036 0.387 1 0.008 0.355 Half concrete housing -0.215 0.4 1 0.591 0.807 Wooden housing -0.356 0.277 1 0.198 0.7 Dug latrine -0.511 0.296 1 0.084 0.6 Without latrine -0.139 0.293 1 0.636 0.871 Own land -0.488 0.298 1 0.102 0.614 Own car/pick up -1.48 0.348 1 0 0.228 Own bicycle -0.29 0.213 1 0.173 0.748 Own tractor -0.988 0.323 1 0.002 0.372 Own radio -0.131 0.261 1 0.616 0.877 Own mobile -0.072 0.221 1 0.743 0.93 Paddy yper capita -0.077 0.087 1 0.377 0.926 Summery First module: Chi-square 241.402 (Sig.000) Log likelihood 687.960 R square.286 Big animal per capita 0.114 0.059 1 0.052 1.121 Constant -1.879 0.461 1 0 0.153
IV. Multivariate results. Conti HH size has positive impact on poverty (B=0.5 &odd=1.67). Increasing in hh size by one unit it is about 2 times of household are more likely to live under the poverty. Household with non-farm professional or activities are about 1 time less likely to be poor compare to those household whose members base more on agricultural professional or farm activities. Household that have better condition of housing, it is found that household who live in concrete house are about one third of a time are less likely to be poor compare to those household who live in bamboo tree or temporary household. The households that own car/pick up truck have negative effect on poverty H h ld h hi hi b fi f h Household that own tractors which is very benefit for them to earn income and help to escape from poverty.
Multivariate results Some factors B S.E. df Sig. Exp(B) Some factors B S.E. df Sig. Exp(B) HH size 0.568 0.054 1 0 1.765 Unemployment -0.158 0.481 1 0.743 0.854 Non-farm occupation -0.127 0.038 1 0.001 0.881 Concrete housing -1.349 0.422 1 0.001 0.259 Half concrete housing -0.53 0.431 1 0.219 0.589 Wooden housing -0.565 0.293 1 0.054 0.568 Dug latrine -0.628 0.34 1 0.065 0.534 Without latrine -0.04 0.316 1 0.9 0.961 Own land -0.655 0.319 1 0.04 0.519 Own car/pick up -1.484 0.363 1 0 0.227 Own bicycle -0.194 0.23 1 0.4 0.824 Own tractor -0.842 0.356 1 0.018 0.431 Own radio -0.126 0.282 1 0.656 0.882 Own mobile -0.19 0.241 1 0.432 0.827 Paddy per capita -0.096096 0.095095 1 0.313 0.909 Big animal per capita 0.126 0.057 1 0.028 1.134 Member work aboard 21.766 40193 1 1 283.588 Receive remittance from member -21.959 40193 1 1 0 Reduce remittance 23.287 40193 1 1 12987955441 Salary cut 1.3 0.299 1 0 3.67 Job loss -0.519 1.386 1 0.708 0.595 Work hour reduce -0.046 1.996 1 0.982 0.955 Loss money from Bank 21.183 22608.1 1 0.999 158.671 Lack of food 53.525 21988.1 1 0.998 176 Length of food hunger -17.662 7329.38 1 0.998 0 People below 15 year of age work 0.24 1.159 1 0.836 1.271 Change eating behaviors 0.097 0.582 1 0.867 1.102 Reduced expenditure 0.089 0.441 1 0.841 1.093 Borrow money 0.299 0.384 1 0.436 1.349 Sell property 0.371 0.831 1 0.656 1.449 Mortgage -0.059 0.913 1 0.948 0.942 More than one jobs -0.329 1.162 1 0.777 0.72 People over 60 year work -0.639 0.747 1 0.392 0.528 Reduce expenditure on electricity -0.439 0.345 1 0.204 0.645 Reduce expenditure on transport -0.114 0.4 1 0.777 0.893 Reduce expenditure on communication 0.578 0.38 1 0.128 1.782 Reduce expenditure on recreation -0.649 0.285 1 0.023 0.523 Constant -1.858 0.535 1 0.001 0.156
IV. Multivariate results. Conti Summery Moule2: After Controlled for socio-economic factors Chi-square 300.270 (Sig.000) Log likelihood 629.092, R square.342 The socio-economic variables such as household size, non-farm, concrete house, own car/pick up truck and own tractor remain significantly affecting poverty. Household who experienced salary cut have positive relationship on poverty, it mean household which member have salary cut are about four time more likely to be poor than those who never For other variables are found not significant on poverty
CONCLUSION AND POLICY IMPLICATION It is reasonable to remark that the effects of the global financial crisis on poverty on those location are not significant. There is only one factor and base one this evidence it is contradict to conclude that the shock hit the community poverty. The reason may be due to Laos still has small economy, financial system and trade are not yet integrated into the world economy. One aspect is that the crisis is not long, however if the crisis last for long time it may hit the country like Laos. Household size still be the issue for the poverty eradication programme in Lao PDR, as long as the fertility rate in the country remain high the poverty will be more difficult to minimize, clearly seeing from this study, family size still be the main factor leading to have more poverty. Therefore the fertility control programme should be considered or the fertility policy of Government should be more advocated to the local people.
CONCLUSION AND POLICY IMPLICATION. Conti Non farm activities such as the profession out side agriculture such as manufacturing, industrial work, trade, business are the activity that help household to be non poor rather than only agriculture, the said job need people who have education thus promoting the household to see the importance of education is needed. Salary cut is one factor that lead household to be poor since the income will be reduced then this could affect their consumption to be down, health care to be down due to the lack of money which in the short and long term their health will be worse. all these are linked it can also link to the education of their children, therefore more study on this issue should be continued and find the way to solve. The study sites should be more expanded to cover the urban area or villages where y p g people are more involved in the employment and dealing with the investment, debt etc, somehow the effects of the Global Financial Crisis might be clearly tracking beside the rural area alone.
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