Vietnam : On the Road to Labor-Intensive Growth?
Since Vietnam's adoption of the doi moi or renovation policy in 1986, the country has been undergoing the transition from central planning to a socialist market-oriented economy. This has translated into strong economic growth, led by the industrial sector, which expanded more than 13 percent a...
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| Format: | Publications & Research |
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World Bank, Washington, DC
2015
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| Online Access: | http://hdl.handle.net/10986/21410 |
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okr-10986-214102021-04-23T14:04:02Z Vietnam : On the Road to Labor-Intensive Growth? Belser, Patrick employment transitional economy economic growth industrial sector labor intensive industries export oriented industries capital intensity manufacturing production labor regulations private sector development survey data household data foreign investments economic crisis accounting aged agriculture amount of land average annual growth banking system basic metals capital inflows central planning climate comparative advantage competitiveness current prices economic development economic growth elasticity employment equilibrium equilibrium models exchange rates export growth exports factors of production food industry foreign direct investment foreign investment forestry GDP GDP deflator GDP per capita gross output growth policies growth rate growth rates human capital import barriers imports income industrial expansion industrialization intermediate goods international trade iron labor costs labor force labor productivity living standards macroeconomic management managers marginal productivity market economies marketing minimum wages monopolies natural resources oil oil reserves partial equilibrium analysis private sector production costs production possibility frontier productivity growth quotas real GDP relative prices savings state enterprises statistical analysis sustainable growth tax rates taxation total output trade flows trade policies trade reforms transport vocational training workers Since Vietnam's adoption of the doi moi or renovation policy in 1986, the country has been undergoing the transition from central planning to a socialist market-oriented economy. This has translated into strong economic growth, led by the industrial sector, which expanded more than 13 percent a year from 1993 to 1997. Vietnamese policymakers are concerned, however, that employment growth has lagged. To address this concern, the author compares new employment data from the Vietnam Living Standards Survey (VLSS 2), completed in 1997-98, with data from the first household survey undertaken in 1992-93. He shows that in 1993-97, industrial employment grew an average of about 4 percent a year, which is low compared with industrial GDP growth. This slower growth was attributable to the capital-intensive, import-substituting nature of the state sector and foreign investment, which dominate industry. The more labor-intensive, export-oriented domestic private sector is still small, although growing quickly. In the future, growth promises to become more labor-intensive. Before the Asian crisis there were signs of an emerging export-oriented sector. Using previous statistical analysis (Wood and Mayer 1998) as well as factor content calculations, the author estimates that given Vietnam's endowment of natural and human resources, Vietnam could triple its manufacturing exports and create about 1.6 million manufacturing jobs in export sectors in the near future. After examining Vietnam's labor regulations, the author concludes that there is no need for basic reform of the labor market. At current levels, minimum wages and nonwage regulations (even if better enforced) are unlikely to inhibit development of the private sector or hurt export competitiveness. But a restrictive interpretation of the Labor Code's provisions on terminating employment could hurt foreign investment, reduce the speed of reform in the state sector, and slow the reallocation of resources to the domestic private sector. 2015-02-05T20:22:25Z 2015-02-05T20:22:25Z 2000-07 http://hdl.handle.net/10986/21410 en_US Policy Research Working Paper;No. 2389 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper East Asia and Pacific Vietnam |
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Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
en_US |
| topic |
employment transitional economy economic growth industrial sector labor intensive industries export oriented industries capital intensity manufacturing production labor regulations private sector development survey data household data foreign investments economic crisis accounting aged agriculture amount of land average annual growth banking system basic metals capital inflows central planning climate comparative advantage competitiveness current prices economic development economic growth elasticity employment equilibrium equilibrium models exchange rates export growth exports factors of production food industry foreign direct investment foreign investment forestry GDP GDP deflator GDP per capita gross output growth policies growth rate growth rates human capital import barriers imports income industrial expansion industrialization intermediate goods international trade iron labor costs labor force labor productivity living standards macroeconomic management managers marginal productivity market economies marketing minimum wages monopolies natural resources oil oil reserves partial equilibrium analysis private sector production costs production possibility frontier productivity growth quotas real GDP relative prices savings state enterprises statistical analysis sustainable growth tax rates taxation total output trade flows trade policies trade reforms transport vocational training workers |
| spellingShingle |
employment transitional economy economic growth industrial sector labor intensive industries export oriented industries capital intensity manufacturing production labor regulations private sector development survey data household data foreign investments economic crisis accounting aged agriculture amount of land average annual growth banking system basic metals capital inflows central planning climate comparative advantage competitiveness current prices economic development economic growth elasticity employment equilibrium equilibrium models exchange rates export growth exports factors of production food industry foreign direct investment foreign investment forestry GDP GDP deflator GDP per capita gross output growth policies growth rate growth rates human capital import barriers imports income industrial expansion industrialization intermediate goods international trade iron labor costs labor force labor productivity living standards macroeconomic management managers marginal productivity market economies marketing minimum wages monopolies natural resources oil oil reserves partial equilibrium analysis private sector production costs production possibility frontier productivity growth quotas real GDP relative prices savings state enterprises statistical analysis sustainable growth tax rates taxation total output trade flows trade policies trade reforms transport vocational training workers Belser, Patrick Vietnam : On the Road to Labor-Intensive Growth? |
| geographic_facet |
East Asia and Pacific Vietnam |
| relation |
Policy Research Working Paper;No. 2389 |
| description |
Since Vietnam's adoption of the doi moi or renovation policy in 1986, the country has been undergoing the transition from central planning to a socialist market-oriented economy. This has translated into strong economic growth, led by the industrial sector, which expanded more than 13 percent a year from 1993 to 1997. Vietnamese policymakers are concerned, however, that employment growth has lagged. To address this concern, the author compares new employment data from the Vietnam Living Standards Survey (VLSS 2), completed in 1997-98, with data from the first household survey undertaken in 1992-93. He shows that in 1993-97, industrial employment grew an average of about 4 percent a year, which is low compared with industrial GDP growth. This slower growth was attributable to the capital-intensive, import-substituting nature of the state sector and foreign investment, which dominate industry. The more labor-intensive, export-oriented domestic private sector is still small, although growing quickly. In the future, growth promises to become more labor-intensive. Before the Asian crisis there were signs of an emerging export-oriented sector. Using previous statistical analysis (Wood and Mayer 1998) as well as factor content calculations, the author estimates that given Vietnam's endowment of natural and human resources, Vietnam could triple its manufacturing exports and create about 1.6 million manufacturing jobs in export sectors in the near future. After examining Vietnam's labor regulations, the author concludes that there is no need for basic reform of the labor market. At current levels, minimum wages and nonwage regulations (even if better enforced) are unlikely to inhibit development of the private sector or hurt export competitiveness. But a restrictive interpretation of the Labor Code's provisions on terminating employment could hurt foreign investment, reduce the speed of reform in the state sector, and slow the reallocation of resources to the domestic private sector. |
| format |
Publications & Research |
| author |
Belser, Patrick |
| author_facet |
Belser, Patrick |
| author_sort |
Belser, Patrick |
| title |
Vietnam : On the Road to Labor-Intensive Growth? |
| title_short |
Vietnam : On the Road to Labor-Intensive Growth? |
| title_full |
Vietnam : On the Road to Labor-Intensive Growth? |
| title_fullStr |
Vietnam : On the Road to Labor-Intensive Growth? |
| title_full_unstemmed |
Vietnam : On the Road to Labor-Intensive Growth? |
| title_sort |
vietnam : on the road to labor-intensive growth? |
| publisher |
World Bank, Washington, DC |
| publishDate |
2015 |
| url |
http://hdl.handle.net/10986/21410 |
| _version_ |
1764448182251552768 |