Promoting GVCs Development in Vietnam

The Project at A Glance

Vietnam has been successful in attracting foreign direct investment (FDI) and entering global value chains (GVCs). FDI has brought enormous gains to Vietnam in terms of growth, exports and jobs, but has been less stellar in developing domestic linkages with global value chains.

International Economics, through its CEO, is conducting a study that will primarily focus on Vietnam’s participation in the GVCs to examine factors that contribute to the success as well as failure of domestic private firms in joining the GVCs.

What We Found

Vietnam has a dynamic but fragmented domestic private sector predominately represented by micro and medium enterprises and business households. Some private firms have managed to penetrate export markets and GVCs. Some have emerged in specific goods and commodity markets in which local producers enjoy a comparative advantage related to agro-ecological conditions, specialized skills or other cost advantages.

It is important to learn from the experience of these successful firms and therefore IEC will conduct a study, that will primarily focus on Vietnam’s participation in the GVCs to examine factors that contribute to the success as well as failure of domestic private firms in joining the GVCs, and how emerging issues, such as decarbonization, energy transition, sustainable development, and digital transformation (including e-commerce) would affect the domestic private firms in climbing up in the value chains of the GCVs.

Our Strategy and Impact

FDI has brought enormous gains to Vietnam in terms of growth, exports and jobs, but has been less stellar in developing domestic linkages with global value chains. It created an environment where foreign firms dominate the country’s exports, potentially undermining sustainable and inclusive long-term growth. Evidence from successive enterprise surveys suggests that the rate of labor productivity growth in manufacturing assembly operations, including electronics, garments and footwear, is slow.

Study will be conducted in collaboration with national consultants responsible for 5 different sectors (textile, agricultural, renewable energy and electronic). IEC will lead the project and oversee the work of the national consultants, in particular oversee the survey activities, including type and methodology to be used, design of survey questionnaire, identification of survey participants, and analysis of survey responses. The study will include a five-year action plan, specifying vision, policy recommendations, and investment needs to strengthen Vietnam’s participation in the R/GVCs.

Our Core Solutions

As businesses seek to expand operations into new markets, the need to explore global supply chains and understand the international regulatory framework becomes crucial. At International Economics Consulting, we build tailor-made strategies for both import and export-oriented business solutions.