Skip to main content

Hello from Saigon

I am currently working at the Fulbright Economics Teaching Program in Ho Chi Minh City with my MPA/ID classmate from the Kennedy School. It has been a week since we started and I thought it best to collect a few thoughts about this amazing place.


I decided to spend my summer in Vietnam not only to study the country's economics but also expose myself to  one of the most fascinating places on earth. Vietnam is a long S-shaped country in South east Asia bordering Laos and Cambodia to the west and China to the north. The entire eastern part of the country is coastline off the South China sea. The country comprises 63 provinces including Ha noi (the capital) and Ho Chi Minh City (Saigon) - the economic engine of Vietnam. Vietnam is classified as a lower-middle income country by the World Bank. The country has come a long way since the implementation of the Doi Moi (renovation) reforms, which initiated the process to turn Vietnam into a market economy. The authorities recognize the challenges ahead including averting the middle income trap and continue to work to make Vietnam globally competitive industrialized country.

While comparisons are fraught with the usual validity challenges it is useful to benchmark Vietnam vis-a-vis its Asian neighbors. The East Asian countries come to mind as well as Vietnam's South East Asian neighbors. (Much of the commentary here is informed by various readings from the Ash Program at HKS as well as musings from my research on industrialization). 

As a late comer to the industrialization game, Vietnam stands to benefit from the experiences of South Korea and Taiwan. More specifically, a common feature of industrial policy of the East Asian 'tigers' (or what the late Alice Amsden calls 'The Rest') was the principle of reciprocity. This means in their goals of becoming national leaders, companies receiving subsidy support from the state were required to export a certain amount of what they produced. Failure to do so often resulted in loss of state support. What this means for Vietnam, as it plans to industrialize is to continuously enforce this principle, particularly with regard to the state owned enterprises (SOEs). 

An example for Vietnam would be the Thai Board of investment (BOI), whose principle of reciprocity was enforced in what Alice Amsden ('The Rise of the Rest' (2004)) calls the New Control Mechanism. More specifically, the relationship between the BOI and the company receiving support was characterized by clear performance criteria. These not only included quantitative limits but also permeated management of the company. Such monitoring is particularly warranted in the case of Vietnam given that the SOE sector is relatively large.

An important caveat to the above is that the reciprocal control mechanisms applied in the Rest were used during the GATT era and would be less possible today under the WTO regime. But I would argue, as does Amsden (2000), that there still exists room within the WTO regime to carry out industrial policy in a similar manner as did the East Asian tigers. Countries acceding to the WTO have a window period to reduce  barriers to trade within which many of the control mechanisms would work. More importantly a careful analysis of the bulk of the New Control Mechanisms do not violate WTO law and can still be carried out today as countries industrialize. 

Feedback is always welcome

---
THE VIEWS EXPRESSED ABOVE ARE MY OWN AND DO NOT REFLECT VIEWS OF THE FULBRIGHT ECONOMICS TEACHING PROGRAM OR  HARVARD UNIVERSITY.






Comments

Post a Comment

Constructive feedback is always welcome. Thank you

Popular posts from this blog

Malaysia at a Cross Roads: Diagnosing the Constraints to High Income Status

Malaysia at a Crossroads: Diagnosing Constraints to High-Income Status In 2008, Malaysia was recognized by the Growth Commission – a distinguished panel comprising 2 Nobel Prize Winning Economists and other leading development practitioners – as one of thirteen countries that sustained high growth in the post-war period. The 30-year stretch that caught the attention of the Growth Commission was between 1967 and 1997 when Malaysia grew at an average of 7.3% per year. This long stretch of growth was interrupted by periods of external shocks including the Volcker shock of 1986, the Asian Financial crisis in 1997/8, later the so-called Dot Com Bubble of 2001, and more recently the Global Financial Crisis of 2008. Despite these shocks, Malaysia remained resilient - formally earning the title "Upper Middle Income Country" in 1992. (See summary figure that breaks down the country's per capita growth story). As...
2 comments
Read more

Corporate Network Analysis

The complex interconnections that define modern society are most readily visible from our Facebook, Twitter, or Linkedin networks. What is perhaps less talked about is the extent to which corporations are linked. I just started building a network of cross shareholding among Malaysia's corporations using listed company data. The map below is a preliminary visualization of the country's corporate network as of 2015. I use social network analysis (SNA) tools to partition or color the network into key connected components or communities therein. I have deliberately excluded company names but I will tell you that the biggest nodes represent the most connected shareholders including governments, fund managers, and international asset managers.  Malaysia's Corporate Network in 2015 Created Using Gephi 0.9.1 As the Malaysia economy has grown so has the complexity of the corporate network from few shareholders to many interlinked players. Below is a visualization using sha...
2 comments
Read more

Assessing labor market transitions in Ghana using panel data

Understanding labor market transitions is important for policymakers and researchers in developing countries. Changes in economic activity status (employed, unemployed, out of labor force) vary significantly from one country to another and also within countries from one socio-economic group to another. Below I summarize analysis from the latest Ghana Annual Household Income and Expenditure Survey ( AHIES ) published by the Ghana Statistical Service. The AHIES is a panel survey that has followed over 10,000 individuals since 2022Q1 to assess changes in their livelihoods. I am currently analyzing trends and show here what has happened to economic activity between Q2 and Q3.  Transitions in Ghana labor force status, 2022Q2 - 2022Q3 Source : Own analysis using AHIES from Ghana Statistical Service. Note : Left hand side is 2022Q2 and right side is 2022Q3 81 percent of working age individuals (15-64-years) who were  employed  in 2022Q2 were still employed in 2022Q3; 7 perc...
Post a Comment
Read more