Working Paper: NBER ID: w19616
Authors: Brian McCaig; Nina Pavcnik
Abstract: We examine the role of structural change in the economic development of Vietnam from 1990 to 2008. Structural change accounted for a third of the growth in aggregate labor productivity during this period, which averaged 5.1 percent per annum. We discuss the role of reforms in agriculture, enterprises, and international integration in this process. In addition to the drastic move of employment away from agriculture toward services and manufacturing, we also document the movement of workers away from household businesses toward firms in the enterprise sector, and the reallocation of workers from state owned firms toward private domestic and foreign owned firms. Manufacturing experienced particularly rapid growth in labor productivity and a large expansion of employment, as it grew from 8 to 14 percent of the workforce. Changes in trade policy, expansion of employment in foreign owned firms, and the declining role of state owned enterprises robustly contributed toward the changing structure of employment within manufacturing.
Keywords: Structural Change; Vietnam; Economic Development; Labor Productivity
JEL Codes: F1; F16; O1; O53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| structural change (L16) | growth in aggregate labor productivity (O49) |
| labor reallocation (J69) | growth in aggregate labor productivity (O49) |
| sectoral productivity improvements (O49) | growth in aggregate labor productivity (O49) |
| movement of labor from agriculture to manufacturing and services (O14) | overall productivity growth (O49) |
| reforms in agriculture (P32) | labor reallocation (J69) |
| reforms in the enterprise sector (P31) | labor reallocation (J69) |
| international integration (F02) | labor reallocation (J69) |
| labor productivity in manufacturing (L23) | overall productivity gains (O49) |
| labor productivity in agriculture (J43) | overall productivity gains (O49) |