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A. Introduction
Poverty and welfare are dependent on many factors,
such as access to services and command over
resources provided by institutions and the environment,
time constraints, incentives (e.g. market prices),
behaviour of the household and its members (e.g.
risk taking), dependency rate, etc. Poverty
can thus be described and defined in several
ways. Very broadly there seems to be four approaches
commonly used to measure poverty. These are
- income and consumption
measures
- anthropomorphic measures
- access to development
opportunities, and
- qualitative methods
From the statistical point of view LAO PDR
is well advanced in having access to data on
poverty. Two large household expenditure surveys,
1992/93 and 1997/98 and population census 1995
have shed light on this issue, not only from
the income side but also on accessibility to
services and development opportunities and to
some extent also on anthropomorphic data. In
this presentation I will focus on our income
and consumption measures and accessibility to
services.
B. Concept and Measurement
of Poverty from Consumption Data
Lao PDR conducted her first expenditure and
consumption survey (LECS I) in 1992/1993. Based
on this survey, the World Bank constructed two
poverty lines. The first line corresponds to
a level of income sufficient to buy 2100 calories
of food per person per day (food poverty line).
The second is a higher line, which includes
an allowance for non-food expenditure. The food
poverty line was at that time 8558 kip per month
per person and the non-food poverty line 11472
kip per person per month. The lines were separately
calculated for three regions: North, Centre
and South and for urban and rural areas.
The concept and methodology of poverty measurement
used thus follow international standard. The
poverty measurement is based on the per capita
consumption (instead of income) as the indicator
of individual welfare. The head count ratio
or the poverty incidence is the main indicator
in this measurement. Another measurement is
the poverty gap index that shows the extent
to which the income of the poor falls below
the poverty line. Consumption per capita is
used.
All these concepts and measurements were repeated
for the second survey, LECS II. As this new
survey was based on good frame from the population
census and the sample 4 times larger than the
first LECS, the recently made analysis is more
reliable than the first one and can now be broken
down even to provincial level.
Since the LECS was undertaken over a whole
year, with teams of interviewers moving from
one place to another in different months, it
is likely that spatial variations in total consumption
expenditure are confounded with price differences
and seasonal changes in consumption. Therefore
a measure of seasonally adjusted household consumption
is used in the analysis. The selection of the
food bundle was selected from the survey but
there is not a big difference from the previous
one. The pattern of the food consumption of
the poor does not change too much over the time.
Based on the data of the LECS II, the National
Statistical Centre (NSC) has constructed a poverty
line, which is a choice of food bundle, typical
for poor households, providing 2100 calories
per person per day. The 2100 calories are often
use as a minimum requirement to feed an adult,
at least in some Asian countries. The line was
constructed from the actual average food consumption
in all households spending between 70-80 % of
their total consumption on food. There are no
official poverty lines applied to Lao official
statistics.
The NSC constructed one line for the overall
country and separate lines for regions (provinces).
Since there are no provincial food prices available
except for rice, regional food prices were estimated
by regression analysis. Rural/urban differences
in food prices were found to be very small,
but provincial differences were significant.
Thus the estimated provincial parameters were
used to calculate different provincial food
poverty lines. If the costs to buy the food
bundle is higher in one province the poverty
line Ppf ( were p indicates province)
has to be raised correspondingly as Ppf=
Pf*(1+b).
Since the requirements of non-food goods are
more arbitrary, the allowance was defined as
the non-food spending by households just able
to meet their food requirements, i.e. the minimum
allowance of non-food item were the amount spent
on food equals the food poverty line.
The following regression was estimated:
fi = a + b *ln(Yi/Pf) + c*( ln(Yi/Pf))2+...+ei
The sum of food poverty line and non-food allowance
is the total poverty line. Individual residing
in the household that spend less than the poverty
line are defined as poor; those whose consumption
falls below the food poverty line are defined
as ultra poor.
C. Accessibility to developments
and other household data
The household surveys conducted in LAO PDR
are multi-purpose surveys which can serve various
needs. The latest survey not only included data
on consumption and expenditure, but also village
services or access to services, demography data,
labour market data, household access to durable
goods, land and animals, nutrition data, household
businesses, agriculture business and a time
use module. Households that are poor or non-poor
can thus be correlated with a variety of characteristics
of the households, e.g are households better
off if they are running a business, are farmers
more poor than workers, do we see access to
markets and services alleviate poverty, etc.
D. Data needs for Poverty
Alleviation Policies and Programmes
This refers to a wide range of social and economic
statistics to inform decision-makers of states
and trends in the economy and on the living
conditions of the people. Such a system of information
is a fundamental instrument for diagnosing problems,
guiding action and evaluating progress made.
Censuses and surveys form elements of such
a system. To be maximally useful and cost-effective
- and indeed to form a system - the elements
need to be related to each other. Only if they
can be used together in a system can duplication
of effort be avoided, quality of various estimates
be assessed and reliable time trends established.
The program in LAO PDR is based on population
censuses, every 10 year, and large scale household
expenditure and consumption survey every 5 year.
An agricultural census was made 1998/99 and
is an input to this subject by forming a frame
for household surveys with particular attention
to agriculture production and income.
What is further needed is some kind of small
annual household survey that can shed some lights
on poverty. Better knowledge of household consumption
would also become a great benefit for the national
accounts. Integrated with such a survey could
be modules on various areas, one or two selected
each year. No decision has been taken yet to
introduce such a survey.
E. Poverty database: current
situation
The usual sources of poverty related data are
presently based mostly on our household expenditure
and consumption surveys. The latest one was
based on almost 9 000 households, stratified
by provinces and urban and rural areas. All
transactions and amounts taken from own consumption
of household members were recorded for one month,
during which time the enumerators stayed in
the village. The 1997/98 database consists of
about 1.7 million transactions. We probably
have a reliable source of data for policy makers.
The calculations of poverty lines are, however,
based on a series of assumptions, and the calculations
do not produce clear-cut results. Therefore
it is essential that the database contain a
wide range of consistent data on access to services,
incentives, etc. as was mentioned before. As
the major activity in LAO PDR is farming, and
to large part subsistence farming, it is essential
to improve the agriculture statistics, production,
pricing of agriculture products, productivity,
irrigation, etc. Such basic data obviously can
not only provide data on changes in economic
performance but also shed light upon how farmers'
welfare situation change.
F. Future work programme
The government has prepared a National Poverty
Alleviation Action Plan. On the statistical
output, there is a work plan, which includes
an Intercensal Demographic and Health Survey
in year 2000, which will update the database
on demographic and health indicators. In 2002/3
a third round of LECS will be implemented. Whether
a small-scale annual household survey will become
a reality and how it will be designed is not
decided upon. LAO PDR will continue on the same
path as before and not only rely on the mere
calculation of poverty lines but also focus
on a wide range of indicators aimed at provide
information the human development in the country.
In this respect there is a need to improve the
so called "bread and butter" statistics and
also target particular areas or groups.
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