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Vietnam: The Next Asian Tiger?

Author

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  • Tom Barker

    (Macro Financial Department, Reserve bank of New Zealand)

  • Murat Ungor

    (Department of Economics, University of Otago)

Abstract

This paper analyzes how trade integration may affect international financial flows in a world with heterogeneous financial development. In the presence of financial frictions and sector-specific minimum investment requirements, the static gains from trade trigger the cross-sector investment reallocation on the extensive margin, which may allow the more financially developed country (North) to offshore low-return production activities and upgrade to high-return activities. This way, trade-driven sectoral upgrading in North becomes a mechanism through which the substantial decline in trade and communication costs and the resulting boom in supply-chain trade may contribute to the global imbalances in the recent decades.We investigate the growth experience of Vietnam, the country which has been getting recent attention as being the next emerging giant. First, we present an aggregate level investigation of Vietnam\'92s economic growth experience, since the inauguration of reform in 1986 known as Doi Moi. Second, we build a two-sector general equilibrium model, investigating the secular decline in agricultural employment. We conduct aquantitative analysis using a theoretical framework, with an emphasis on the counterfactual outcomes of inheriting Chinese sectoral productivity growth rates, where China is recognized as the paragon emerging economy. The main findings are: (i) Vietnam has grown impressively since 1986, but is still a relatively poor country in absolute terms; (ii) Vietnam must decrease its reliance on factor accumulation as its source of growth and increase its technological capabilities; (iii) economic policies should equally target both agricultural and nonagricultural sectors to increase sectoral productivity growth rates in Vietnam.\

Suggested Citation

  • Tom Barker & Murat Ungor, 2018. "Vietnam: The Next Asian Tiger?," Working Papers 3, New Zealand Centre of Macroeconomics.
    • Handle: RePEc:nzm:wpaper:wp3
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    2. Thi Huong Trinh & Dharani Dhar Burra & Michel Simioni & Stef de Haan & Tuyen Thi Thanh Huynh & Tung Van Huynh & Andrew D. Jones, 2019. "Supermarkets and their impacts on the relationship between food acquisition patterns and socio-economic and demographic characteristics of households: empirical evidence from Vietnam," Post-Print hal-02790424, HAL.
    3. Huong Thi Trinh & Burra D. Dhar & Michel Simioni & Stef de Haan & Tuyen Thi Thanh Huynh & Tung V. Huynh & Andrew D. Jones, 2020. "Supermarkets and household food acquisition patterns in Vietnam in relation to population demographics and socioeconomic strata: insights from public data," Post-Print hal-02624928, HAL.
    4. , Le Thanh Tung, 2023. "Investment in Research and Development in an Asian emerging economy: An overview and policy implications," OSF Preprints 85adk, Center for Open Science.
    5. Erdoğan, Seyfettin & Yıldırım, Durmuş Çağrı & Gedikli, Ayfer, 2020. "Natural resource abundance, financial development and economic growth: An investigation on Next-11 countries," Resources Policy, Elsevier, vol. 65(C).
    6. Mai, Nhat Chi, 2021. "Determinants of successful adoption of the Balanced Scorecard in Vietnamese small and medium-sized enterprises," OSF Preprints 5hx2r, Center for Open Science.
    7. Ta-Thi Huong & Liang Dong & Izhar Hussain Shah & Hung-Suck Park, 2021. "Exploring the Sustainability of Resource Flow and Productivity Transition in Vietnam from 1978 to 2017: MFA and DEA-Based Malmquist Productivity Index Approach," Sustainability, MDPI, vol. 13(21), pages 1-26, October.
    8. Van Le, Dao & Tran, Tuyen Quang, 2022. "Does the private sector increase inequality? Evidence from a transitional country," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 451-466.

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    More about this item

    Keywords

    Vietnam; capital formation; convergence; deagriculturalization;
    All these keywords.

    JEL classification:

    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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