Chapter 6 Economic integration and changes in industrial location in Vietnam

Vietnam has been praised for its achievements in economic growth and success in poverty reduction over the last two decades. The incidence of poverty reportedly fell from 58.1% in 1993 to 19.5% in 2004 (VASS [2006, 13]). The country is also considered to have only a moderate level of aggregate economic inequality by international comparisons. As of the early 2000s, Vietnam’s consumption-based Gini coefficient is found to be comparable to that of other countries with similar levels of per capita GDP. The Gini index did increase between 1993 and 2004, but rather slowly, from 0.34 to 0.37 (VASS [2006, 13]). Yet, as the country moves on with its market oriented reforms, the question of inequality has been highlighted in policy and academic discourses. In particular, it is pointed out that socio-economic inequalities between regions (or provinces) are significant and have been widening behind aggregate figures (NCSSH [2001], Mekong Economics [2005], VASS [2006]). Between 1993 and 2004, while real per capita expenditure increased in all regions, it grew fastest in those regions with the highest per capita expenditures and vice versa, resulting in greater regional disparities (VASS [2006, 37]). A major contributing factor to such regional inequalities is the uneven distribution of industry within the country. According to the Statistical Yearbook of Vietnam, of the country's gross industrial output in 2007, over 50% belongs to the South East region, close to 25% to the Red River Delta, and about 10% to the Mekong River Delta. All remaining regions share some 10% of the country's gross industrial output. At a quick glance, the South East increased its share of the total industrial gross output in the 1990s, while the Red River Delta started to gain ground in more recent years. How can the government deal with regional disparities is a valid question. In order to offer an answer, it is necessary in the first place to grasp the trend of disparities as well as its background. To that end, this paper is a preparatory endeavor. Regional disparities in industrial activities can essentially be seen as a result of the location decisions of enterprises. While the General Statistics Office (GSO) of Vietnam has conducted one enterprise census (followed by annual enterprise surveys) and two stages of establishment censuses since 2000, sectorally and geographically disaggregated data are not readily available. Therefore, for the moment, we will draw on earlier studies of industrial location and the determinants of enterprises’ location decisions in Vietnam. The remainder of this paper is structured as follows. The following two sections deal with the country context. Section 2 will outline some major developments in Vietnam’s international economic relations that may affect sub-national location of industry. According to the theory of spatial economics, economic integration is seen as a major driver of changes in industrial location, both between and within countries (Nishikimi [2008]). Section 3, on the other hand, will consider some possible factors affecting geographic distribution of industry in the domestic sphere. In Section 4, existing literature on industrial and firm location will be examined, and Section 5 will briefly summarize the findings and suggest some areas for future research.

Toward an inclusive and a little bit ethical world trading system : listening to the voices of the people in LDCs

Many specialists in international trade have started saying that the era of a mega FTA is approaching. If the three poles of the global economy, namely East Asia, EU and the United States, form mega FTAs, most of the volume of global trade will be covered. That may be fine, but there will be many countries left out of the mega FTA, most of which will be the least developed countries (LDCs). Since the inception of the Doha Development Agenda (DDA) negotiations in 2001, the WTO and its member countries have tried to include LDCs in the world trading system through various means, including DFQF and AfT. Although these means have some positive impact on the economic development of LDCs, most of the LDCs will never feel comfortable with the current world trading system. To overcome the stalemate in the DDA and to create an inclusive world trading system, we need more commitment from both LDCs and non-LDCs. To surmount the prolonged stalemate in the DDA, we should understand how ordinary people in LDCs feel and think about the current world trading system. Those voices have seldom been listened to, even by the decision makers of their own countries. So as to understand the situation of the people in LDCs, IDE-JETRO carried out several research projects using macro, meso and micro approaches. For the micro level, we collected and analyzed statements from ordinary people concerning their opinions about the world trading system. The interviewees are ordinary people such as street vendors, farmers and factory workers. We asked about where they buy and sell daily necessities, their perception of imported goods, export promotion and free trade at large, etc. These ‘voices of the people’ surveys were conducted in Madagascar and Cambodia during 2013. Based on this research, and especially the findings from the ‘voices of the people’ surveys, we propose a ‘DDA-MDGs hybrid’ strategy to conclude DDA negotiations and develop a more inclusive and a little bit more ethical world trading system. Our proposal may be summarized in the following three points. (1) Aid for Trade (AfT) ver. 2 Currently AfT is mainly focused on coordinating several aid projects related to LDCs’ capacity building. However, this is inadequate; for the proposed ‘DDA-MDGs hybrid’, a super AfT is needed. The WTO, other development agencies and LDC governments will not only coordinate but also plan together aid projects for trade capacity building. AfT ver. 2 includes infrastructure projects either gran aid, ODA loans and private investment. This is in accordance with the post-MDGs argument which emphasizes the role of the private sector. (2) Ethical Attitude Reciprocity is a principle of multilateral agreement, and it has been a core promise since GATT. However, for designing an inclusive system, special and differential treatment (S&D) is still needed for disadvantaged members. To compromise full reciprocity and less than full reciprocity, an ethical attitude on the part of every member is needed in which every member refrains from insisting on the full rights and demands of its own country. As used herein, the term ‘ethical’ implies more consideration for LDCs, and it is almost identical to S&D but with a more positive attitude from developed countries (super S&D). (3) Collect Voices of the People In order to grasp the real situation of the people, the voices of the people on free trade will continue to be collected in other LDCs, and the findings and leanings will be fed back to the WTO negotiation space.