Agricultural Diversification and Vulnerability to Poverty:
A comparison between Vietnam and Thailand
Suwanna Praneetvatakul, Tung D. Phung, and Hermann Waibel
Vulnerability to Poverty: Theory,
Measurement and Determinants, with Case Studies from Thailand and Vietnam, Chapter 7
This paper compares diversification strategies in the six provinces included in the DFG project in the two countries. The overall aim of the chapter is to better understand the success and failure of land and labor diversification as self-insurance mechanisms in agriculture in emerging market economies.Two models were applied. First to measure the effect of shocks and risks on the portfolio income using two indices of diversification and second the effect of diversification on household consumption and a household’s vulnerability to poverty is investigated. Results show that rural households in Thailand and Vietnam used different diversification strategies as self-insurance mechanism for ex-post and ex-ante coping with shocks and risks. In Vietnam, where weather-related shocks are more abundant and where households expect more agricultural risks in the future they tend to grow a higher diversity of crops. In Thailand households use labor diversification as a coping strategy and households with higher levels of labor diversification are less likely to be poor in the future. The results clearly show differences in the economic and institutional conditions in both countries. The chapter ends with drawing policy conclusions which are specific to the different conditions in the two countries.