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1. Development of the Blue Economy in Viet Nam

Author:
Vo Tri Thanh
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Viet Nam is exploring various models to promote long-term economic growth and sustainable development, including the blue economy. Viet Nam’s policy documents have no formal definition of the marine economy or the newer concept of the blue economy. However, the policy documents have increasingly captured the essence of the blue economy, especially related to sustainable development. While lacking frequent updates and sufficient scope, the available statistics show the importance of the marine economy in the country. Viet Nam has various advantages for blue economy development, including high levels of sea traffic, a large sea area, a long coastline, and abundant marine resources. New opportunities for blue economy development can arise from consumers’ attention to sustainable development, improvement of the related legal framework, and cooperation with partners and foreign investors. However, Viet Nam needs to improve the awareness of local authorities and people, strengthen institutions for blue economy development, and upgrade the capacity to forecast and warn of natural disasters and climate change at sea, including via international cooperation.
Topic:
Governance, Regulation, Sustainability, ASEAN, and Blue Economy
Political Geography:
Vietnam and Southeast Asia

2. Impacts of FDI Presence and Product Sophistication on the Demand for Skilled and Unskilled Labour: Evidence from SMEs in Viet Nam

Author:
Quang Hoan Truong and Van Chung Dong
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study employs data from the Viet Nam Enterprise Survey (VES) for 2007 and 2011) to examine the effect of foreign direct investment (FDI) and product sophistication as well as the interaction between these two factors on the skilled and unskilled labour demand on Viet Nam’s small and medium-sized enterprises (SMEs). It finds that the FDI presence in the same industry but different regions – and FDI in the same region but different industries – has a positive effect on the skilled labour demand and a negative impact on the unskilled labour demand. FDI in the same industry has a negative effect on the skilled labour demand and an advantageous impact on the unskilled labour demand. The product sophistication index is found to positively affect the skilled labour demand but decreases the demand for unskilled labour. When interacting with product sophistication, FDI presence in the same industry and region positively affects the skilled labour demand. The study also finds the opposite impacts of different types of FDI presence as well as the interaction between FDI presence and product sophistication on the demand for highly, medium-, and basic-skilled labour. Thus, it is important to consider the opposite effects of different types of FDI and the interaction between FDI presence and product sophistication on SME labour demand by skills level.
Topic:
Foreign Direct Investment, Skilled Labor, Small Industries, and Unskilled Labor
Political Geography:
Vietnam and Southeast Asia

3. Adoption of Sustainable Practices for Improving Agricultural Productivity in Viet Nam

Author:
Huong-Giang Pham, Tuong-Anh T. Nguyen, and Hoang-Nam Vu
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Conventional agricultural methods are putting considerable strain on developing countries’ environments. This problem can be ameliorated through the adoption of Sustainable Agricultural Practices (SAPs), which can bring economic, ecological and social benefits for farmers, consumers and the overall economy. However, the adoption rates of SAPs remain low in many developing countries. It is therefore vital to provide empirical evidence on the improvement of agricultural productivity as it may assist policymakers in designing suitable policy as well as encourage farmers to adopt SAPs on their farms. This study analyses the impacts of different SAP adoption packages on land productivity and labour productivity in Viet Nam. This is the first attempt in the context of Viet Nam to investigate the economic effects of adopting different SAP packages including crop diversification (CD), conservation agriculture practices (CA) and a combination of those. Using panel Viet Nam Access to Resources Household Survey (VARHS) data with multinomial endogenous switching regressions and an instrumental variable helps reduce potential biases in impact evaluation that previous studies have not fully addressed. Results confirm that if a farmer adopts SAPs, it may raise his net profit per hectare by about 4 million Vietnamese Dong (D)/ha/year, whereas the agricultural income per hectare increases by about 4–6 million D/ha/year. Moreover, the joint adoption of multiple SAPs brings higher benefits (of about 2–4 more million D/ha/year) than single SAP adoption. These findings suggest that policymakers and related stakeholders should focus on promoting the adoption of a combination of crop diversification and conservation practices.
Topic:
Agriculture, Sustainability, and Productivity
Political Geography:
Vietnam and Southeast Asia

4. Productivity Effects of Viet Nam’s Rice Land Restrictions

Author:
Peter Warr and Huy Quynh Nguyen
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Viet Nam’s 1986 programme of market-oriented economic reforms did not include the freedom of farmers to choose their crops independently. Large areas of land remain restricted to rice production. This paper studies the effects of this policy on agricultural productivity, using panel data from the Viet Nam Access to Resources Household Survey (VARHS), covering the years 2008 to 2016. The econometrics uses fixed effects methods with and without the additional use of instrumental variable methods to allow for the possible statistical endogeneity of the restrictions. The findings are that the crop choice restrictions reduced the overall productivity of annual crop land by about 5%, reduced the overall productivity of farm labour by about 8% and reduced the mean incomes of farm households by 5%–6%, implying increased levels of rural poverty. Moreover, rice output would have been no lower if the restrictions were removed.
Topic:
Agriculture, Development, Governance, Regulation, Land, and Productivity
Political Geography:
Vietnam and Southeast Asia

5. Does the Skill Premium Influence Educational Decisions? Evidence from Viet Nam

Author:
Ian Coxhead and Nguyen Vuong
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Viet Nam’s economy has grown and changed in dramatic ways since WTO accession in 2007. Much of the growth and change is due to expanded international trade and FDI. These in turn have greatly increased domestic labour demand. However, growth that exploits the country’s abundant supply of low-skill labour may depress the relative demand for skills. In this paper we ask whether the skill premium – the relative price of skills, which also measures the gross economic benefit to schooling at high school and beyond – plays an influential role in schooling decisions amongst teenagers for whom wage-work is an alternative to continued education. We first use event study methods to clarify trends in wages and skill premia. We then decompose influences on upper secondary school enrolments from income growth, demographic change, and skill premia. We find that the college skill premium has a positive influence on enrolments, whereas the premium from upper secondary completion has no significant effect. Our conclusions explore implications for future productivity growth as well as economic and educational policies.
Topic:
Education, Labor Issues, Human Capital, Productivity, Skills, and Competition
Political Geography:
Vietnam and Southeast Asia

6. Global Value Chain Participation and Labour Productivity in Manufacturing Firms in Viet Nam: Firm-Level Panel Analysis

Author:
Upalat Korwatanasakul and Tran Thi Hue
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study describes the status of global value chains (GVCs) in Viet Nam and examines the roles of GVC participation and technology in enhancing labour productivity in manufacturing firms. The estimation method is a panel fixed-effect regression employing unique firm-level data matching the Vietnam Technology and Competitiveness Survey and Vietnam Enterprise Survey, 2009–2018. The findings show the positive effect of backward GVC participation when considering firm GVC participation status (i.e. whether they engage with backward linkages). However, when accounting for GVC participation degree (i.e. GVC participation index), the results show a stark contrast, revealing the negative effect of backward GVC participation on labour productivity. The results, therefore, partly reject the learning-to-learn hypothesis. On the other hand, regardless of GVC indicators, forward GVC participation positively impacts labour productivity, confirming the views of learning-by-exporting and learning-by-supplying. The findings also suggest the significance of research and development, digital technology, and foreign investment in enhancing labour productivity. Therefore, policies promoting forward GVC participation should be the priority, while policies to promote backward GVC participation should be well designed and accompanied by policies that ensure technology transfer and domestic technology development to avoid the trap of a subordinate role.
Topic:
Labor Policies, Manufacturing, Industry, Global Value Chains, and Labor Market
Political Geography:
Asia and Vietnam

7. Entry Mode Choice and Performance of Foreign Direct Investment Firms in Emerging Economies: Micro-evidence from Viet Nam

Author:
Linh Bui, Huyen Hoang, and Hang Bui
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Does the right entry mode choice help foreign direct investment (FDI) firms to perform efficiently in emerging economies? This study attempts to answer this question by examining the impact of the entry mode choice made by FDI firms on their post-entry performance in emerging markets. Using a dataset derived from specific firms for the period 2002–2016, this study accounts for the selection biases and inherent differences of FDI firms that affect their selection of entry strategies. The study found that, with regard to the manufacturing sector, the ownership type with a wholly owned subsidiary (WOS) had negative impacts on either the technical efficiency or the total factor productivity (TFP) of firms. Conversely, regarding all sectors in the economy, the WOS is likely to have a positive role on technical efficiency and TFP. It is also interesting to see that for firms with an equity joint venture (EJV) type, the higher proportion of capital contribution from domestic firms might lead to lower technical efficiency and TFP. It implies that the higher degree of management and control by the domestic firms compared with foreign firms would have negative impacts on the EJV firms’ performance.
Topic:
Economics, Foreign Aid, Foreign Direct Investment, and Emerging Powers
Political Geography:
Asia and Vietnam

8. Getting to Grade 10 in Viet Nam: Challenges from Deprivation, Discrimination, and a Booming Job Market

Author:
Ian Coxhead, Nguyen Vuong, and Phong Nguyen
Publication Date:
02-2021
Content Type:
Research Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Viet Nam has enjoyed more than a generation of rapid economic growth, led by labour-intensive exports. This form and pace of growth has increased schooling opportunities, but has also reduced incentives for some students to advance to higher education. We hypothesise that these conflicting influences help explain another puzzle – the relatively slow growth of educational progression to upper secondary school. Slow and unevenly distributed increases in schooling attainment are warning signs for the sustainability of future aggregate growth and for the distribution of growth gains. We use a new data set on participation rates and scores in an exam to enter Grade 10, the first year of upper secondary school, to analyse the variation in test participation rates due to demand- and supply-side factors. The data are drawn from less advanced provinces within Viet Nam. As such, they shed light on the challenges of expanding educational development at the extensive margins of lower socio-economic status and higher grades, especially in areas with large ethnic minority populations.
Topic:
Labor Issues, Employment, Economic Growth, Training, and Job Creation
Political Geography:
Asia, Vietnam, and Southeast Asia

9. Understanding Quality Energy-Related Infrastructure Development in the Mekong Subregion: Key Drivers and Policy Implications

Author:
Han Phoumin, Sopheak Meas, and Hatda Pich An
Publication Date:
03-2021
Content Type:
Research Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Many players have supported infrastructure development in the Mekong Subregion, bridging the missing links in Southeast Asia. While the influx of energy-related infrastructure development investments to the region has improved the livelihoods of millions of people on the one hand, it has brought about a myriad of challenges to the wider region in guiding investments for quality infrastructure and for promoting a low-carbon economy, and energy access and affordability, on the other hand. Besides reviewing key regional initiatives for infrastructure investment and development, this paper examines energy demand and supply, and forecasts energy consumption in the subregion during 2017–2050 using energy modelling scenario analysis. The study found that to satisfy growing energy demand in the subregion, huge power generation infrastructure investment, estimated at around $190 billion–$220 billion, is necessary between 2017 and 2050 and that such an investment will need to be guided by appropriate policy. We argue that without redesigning energy policy towards high-quality energy infrastructure, it is very likely that the increasing use of coal upon which the region greatly depends will lead to the widespread construction of coal-fired power plants, which could result in increased greenhouse gas and carbon dioxide emissions.
Topic:
Development, Energy Policy, Infrastructure, Renewable Energy, and Carbon Emissions
Political Geography:
China, Asia, Vietnam, Burma, Cambodia, Thailand, Southeast Asia, Laos, and Myanmar

10. Enhancing Inter-Firm Linkages through Clusters and Digitalisation for Productivity Growth

Author:
Vo Tri Tranh
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This paper examines the policies for industrial cluster development in Viet Nam. The first export processing zone was established in 1991. Since 1994, Viet Nam has focused more on developing domestic productive capacity and thus various types of industrial estates were established. The key actors in industrial cluster policy are the government, Prime Minister, ministries, provincial people’s committees, and management boards of industrial and economic zones. The choice of industrial estate is often determined by factors such as geographic location, land, labour, infrastructure, industry, business environment, and incentives. Viet Nam has provided various incentives to industrial estates of various types, but the scope and extent of preferential policy support for firms in general and those operating in industrial and economic zones are rather modest. The industrial estates have contributed significantly to attracting foreign direct investment, to exports, to productivity improvement, etc. Looking forward, Viet Nam needs further efforts on industrial cluster development, including development of statistics, analysis of cluster policy impacts, and provision of FTA-consistent incentives.
Topic:
Development, Industrial Policy, Governance, Leadership, and Management
Political Geography:
Asia and Vietnam

11. Trade Reform and the Evolution of Agglomeration in Vietnamese Manufacturing

Author:
Đoàn Thi Thanh Ha and Hông Quỳnh Nguyen
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
It is well-documented that agglomeration contributes to productivity growth. However, concentrations of workers could also lead to increasing regional income disparities. Therefore, understanding the evolution of agglomeration is relevant for the formulation of industrial policy and inclusive growth. This study documents the extent, pattern, and determinants of agglomeration in Vietnamese manufacturing during 2002–2016, a period when substantial economic reform took place. Our major findings are three-fold. First, agglomeration, as measured by the Ellison–Glaeser index, has declined since the mid-2000s. Second, there exists significant sectoral heterogeneity in the level and trend of agglomeration. Third, we do not find a significant impact of trade and foreign direct investment on agglomeration per se. However, foreign direct investment in port districts does contribute to disagglomeration.
Topic:
International Trade and Finance, Reform, Manufacturing, and Productivity
Political Geography:
Asia and Vietnam

12. Assessment of Industrial Cluster Policies in Viet Nam: The Role of Special Economic Zones in Attracting Foreign Direct Investment

Author:
Nguyen Quynh Huong
Publication Date:
06-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Special economic zones (SEZs) are considered as one of important regional industrial policies to attract foreign investment in developing countries such as Viet Nam. The review of SEZs development in Viet Nam including the comprehensive review of infrastructure and business environment in SEZs are presented in this paper for the first time. Moreover, the paper gives novel non-parametric evidence to indicate the positive causal linkage between the zoning policies and the attraction of foreign investment at district-level in the country during the period 2011–2015.
Topic:
Industrial Policy, Regional Cooperation, Foreign Direct Investment, and Industry
Political Geography:
Asia and Vietnam

13. Technology Imports and Employment in Developing Countries: Evidence from Viet Nam

Author:
Thu Thu Vu and Duc Anh Dang
Publication Date:
08-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Advanced machines and technology replace workers through automation. However, capital–labour substitution need not reduce aggregate labour demand, as it induces simultaneous contrasting effects within industries. To explore these effects, we examine the relationship between employment in Vietnamese manufacturing firms and imported capital goods in 2011–2017. To solve the problem of potential endogeneity and measurement errors, we used Association of Southeast Asian Nations (ASEAN) imported capital goods as an instrument variable for imported capital goods in Viet Nam. We found that imported capital goods do not displace employment and even increase employment and labour productivity. The impacts of imported advanced technology are more pronounced in large firms. More imported technology increases labour productivity in state-owned enterprises and the number of workers in large firms and firms in industrial zones. However, the increase in the level of employment is lower in industries and firms intensively using machines.
Topic:
Development, Science and Technology, Employment, and Imports
Political Geography:
Asia and Vietnam

14. Sustainable Water Resource Development Scenarios and Water Diplomacy in the Lower Mekong Basin: Policy Implications

Author:
Han Phoumin
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This paper uses the current results of the Basin-wide water resource development scenario assessment of the Council Study of the Mekong River Commission Secretariat (MRCS) to analyse potentials benefits for economic development to meet the ambitious goal of the riparian states of the Lower Mekong Basin (LMB) countries for poverty reduction and, at the same time, analyse the risks of potential trans-boundary trade-off, which will require an appropriate mechanism to be in place. The scenario assessment results present both opportunities and risks associated with different levels of water resource development in the Mekong countries and the implications of the water diplomacy for both the lower and uper mekong basin. All scenarios could be broadly placed into three main categories with different timeframes and assumptions. Scenario M1 – the early development scenario – characterises baseline water resource developments in 2007; Scenario M2 – the medium-term definite future scenario – characterises existing, under-construction, and firmly-committed water related developments in 2020; and Scenario M3 – the long-term planned development scenario – characterises the planned water developments in 2040 in addition to those assigned for 2020 for implementation over the following 2 decades. The main scenarios aggregate combinations of water resource developments enabling the cumulative assessment of environmental, social, and economic effects in the Member Countries. The Scenarios will bring both economic opportunities in terms of benefits from water resource development as well as risks related to biodiversity changes, the environmental damages and losses of livelihoods, and the dependency on the natural resources of the Mekong River. Each of the scenario results presents the trans-boundary trade-off which requires appropriate skills, capacities of the LMB riparian countries, and water diplomacy to discuss and negotiate for the solutions. Finally, this paper provides some suggestions and policy implications that could be possible mechanisms and solutions for sustainable water resource development in the Mekong region.
Topic:
Environment, Natural Resources, Water, and Sustainability
Political Geography:
Asia, Vietnam, Thailand, and Laos

15. he Effects of Prenatal Exposure to Plentiful Rainfall on Cognitive Development in Viet Nam

Author:
Nobuaki Yamashita and Trong-Anh Trinh
Publication Date:
12-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
We examine the impact of exposure to plentiful rainfall while in utero on the cognitive development of the same children from ages 5 to 15 from the Young Lives Project in Viet Nam. Using variations in the month and place of birth, we show that positive income shocks, proxied by above-average rainfall, are associated with better cognitive development up to age 8. The effect is more pronounced when positive shocks occurr early in gestation. However, we find that such positive effects are not sustained in the longer term and are completely absent at ages 10, 12, and 15. Our results call for effective and early policy interventions providing a sustained pathway for the cognitive development of children in weather disaster-prone regions.
Topic:
Environment, Natural Disasters, and Weather
Political Geography:
Asia and Vietnam

16. The Role of Innovation in Skill Development: Evidence from Small and Medium-Sized Enterprises in Viet Nam

Author:
Duc Anh Dang and Vuong Ahn Dang
Publication Date:
12-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Using the Small and Medium Enterprise Survey in Vietnam and three proxies of innovation, we study the impact of firm innovation on on-the-job training in the manufacturing sector from 2007 through 2015. To address potential measurement errors and omitted variable problems, we use the average level of innovation in the same sector in other districts as an instrument for firms’ innovations. We find that firms provide additional training for existing workers when introducing new technology, and high-value-added firms provide additional training for existing workers. Moreover, government assistance may not be the main reason that encourages firms to provide training. The results also show that firms hire more skilled workers when implementing innovations.
Topic:
Development, Training, Innovation, and Skilled Labor
Political Geography:
Asia and Vietnam

17. Value Added Exports and the Local Labour Market: Evidence from Vietnamese Manufacturing Firms

Author:
Duc Anh Dang
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The formation of global value chains (GVCs) has reshaped production processes across countries. This paper investigates the relationship between GVCs and firms’ employment by using panel data on Vietnamese small manufacturing firms for 2005–2011. The results suggest that increased foreign value added in exports results in higher wages, increased productivity, and a greater share of production workers in domestic small and medium-sized enterprises. In addition, it brings about a lower share of professionals and makes smaller firms retrain their existing workers. At the same time, domestic value added in the export of intermediate products has negative impacts on employment and increases wages, particularly in medium-sized firms. All of these may come from the increased competition for labour from larger firms.
Topic:
International Cooperation, Labor Issues, Trade, and Global Value Chains
Political Geography:
Asia and Vietnam

18. Global Value Chains and Formal Employment in Viet Nam

Author:
Trinh Q. Long, Le T. Trang, and Matthias Helble
Publication Date:
09-2019
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study investigates the impacts of integration into global value chains (GVCs) on formal and informal employment in Viet Nam. Utilising the Viet Nam Household Living Standard Surveys and the Organisation for Economic Co-operation and Development’s Trade in Value Added database (in 2010, 2012, and 2014), we examine how GVCs’ engagement affects the share of formal employment (through a fixed effects estimator) and the likelihood of being a formal employee (through a probit estimator). Our estimation results show a positive relationship between the level of GVC engagement and the share of formal employment at the provincial level. While the GVC participation index (measured as the sum of backward and forward participation indices) does not have a statistically significant effect on the share of formal employment at the provincial level, each component of GVC participation (i.e. backward and forward participation) has effects at the provincial level in different directions. At the individual level, we find that provincial GVC engagement is also positively correlated with individuals’ likelihood of being formally employed. However, the probability of being a formal employee (individual) is not directly affected by GVC engagement at the provincial level, but is indirectly affected through the local labour market. Such results indicate that individual and household characteristics are robust determinants of being employed as a formal employee.
Topic:
Labor Issues, Employment, and Global Value Chains
Political Geography:
Asia and Vietnam