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Vietnam at a Crossroads at Vietnam Engaging in the Next Generation Ofengaging in the Next Generation Claire H Vietnam at a Crossroads at Vietnam DIRECTIONS IN DEVELOPMENT Trade Hollweg, Smith, and Taglioni Smith, and Hollweg, Vietnam at a Crossroads Engaging in the Next Generation of Global Value Chains Claire H. Hollweg, Tanya Smith, and Daria Taglioni, Editors Vietnam at a Crossroads DIRECTIONS IN DEVELOPMENT Trade Vietnam at a Crossroads Engaging in the Next Generation of Global Value Chains Claire H. Hollweg, Tanya Smith, and Daria Taglioni, Editors © 2017 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 20 19 18 17 This work is a product of the staff of The World Bank with external contributions. The findings, interpreta- tions, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) http:// creativecommons.org/licenses/by/3.0/igo. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions: Attribution—Please cite the work as follows: Hollweg, Claire H., Tanya Smith, and Daria Taglioni, eds. 2017. Vietnam at a Crossroads: Engaging in the Next Generation of Global Value Chains. Directions in Development. Washington, DC: World Bank. doi:10.1596/978-1-4648-0996-5. License: Creative Commons Attribution CC BY 3.0 IGO Translations—If you create a translation of this work, please add the following disclaimer along with the attribution: This translation was not created by The World Bank and should not be considered an official World Bank translation. The World Bank shall not be liable for any content or error in this translation. 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All queries on rights and licenses should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: [email protected]. ISBN (paper): 978-1-4648-0996-5 ISBN (electronic): 978-1-4648-0982-8 DOI: 10.1596/978-1-4648-0996-5 Cover photo: To Hoai Nam/Dovimex Cover design: Debra Naylor/Naylor Design. Library of Congress Cataloging-in-Publication Data has been requested. Vietnam at a Crossroads • http://dx.doi.org/10.1596/978-1-4648-0996-5 Contents Preface xi Acknowledgments xvii About the Editors xix Contributing Authors xxi Abbreviations xxiii Chapter 1 Overview 1 Claire H. Hollweg, Tim Sturgeon, and Daria Taglioni Key Takeaways 1 Current Conditions and Challenges 3 Drivers and Enablers 11 Barriers, Threats, and Challenges 13 Notes 25 Bibliography 26 PART 1 Cross-Cutting Determinants of GVC Participation 27 Chapter 2 Enterprise Dynamics and Job Flows in Vietnam 2004–12 29 Reyes Aterido and Mary Hallward-Driemeier Key Takeaways 29 Current Conditions and Challenges 31 Concrete Actions 36 Key Outcomes 36 Drivers and Enablers 37 Barriers, Threats, and Challenges 37 Bibliography 38 Chapter 3 Servicifying the Vietnamese Economy 39 Claire H. Hollweg Key Takeaways 39 Current Conditions and Challenges 41 Concrete Actions 46 Key Outcomes 52 Vietnam at a Crossroads • http://dx.doi.org/10.1596/978-1-4648-0996-5 v vi Contents Drivers and Enablers 52 Note 53 Bibliography 53 Chapter 4 Connectivity for Growth 55 Ben Shepherd Key Takeaways 55 Current Conditions and Challenges 57 Concrete Actions, Key Outcomes, and Potential Constraints 62 Note 67 Bibliography 68 Chapter 5 Vietnam in 2030 69 Ruth Banomyong Key Takeaways 69 Current Conditions and Challenges 71 Concrete Actions 77 Key Outcomes 77 Note 78 Bibliography 78 Chapter 6 Vietnam’s Preferential Trade Agreements 81 Axel Berger and Dominique Bruhn Key Takeaways 81 Vietnam in the PTA Landscape 84 Potential for Vietnam’s GVC Participation 88 Notes 96 Bibliography 97 PART 2 In-Depth Studies of GVC-Intensive Sectors 99 Chapter 7 Vietnam’s Textile and Apparel Industry and Trade Networks 101 Stacey Frederick Key Takeaways 101 Current Conditions and Challenges 103 Concrete Actions 106 Key Outcomes 108 Drivers and Enablers 108 Barriers, Threats, and Challenges 108 Notes 108 Bibliography 109 Vietnam at a Crossroads • http://dx.doi.org/10.1596/978-1-4648-0996-5 Contents vii Chapter 8 Agribusiness in 2035 111 Miles McKenna Key Takeaways 111 Current Conditions and Challenges 114 Concrete Actions 120 Key Outcomes 124 Drivers and Enablers 126 Barriers, Threats, and Challenges 127 Notes 130 Bibliography 130 Chapter 9 Vietnam’s Evolving Role in ICT Global Value Chains 133 Timothy Sturgeon and Ezequiel Zylberberg Key Takeaways 133 Current Conditions and Challenges 135 Concluding Remarks 154 Notes 155 Bibliography 156 Chapter 10 The Role of Vietnam’s Services Regulation in the ICT Sector 159 Martín Molinuevo Key Takeaways 159 Current Conditions and Challenges 161 Concrete Actions 168 Key Outcomes 169 Bibliography 170 Chapter 11 Vietnam in the ASEAN Motor Vehicle Industry 173 Guillermo Arenas with contributions from Timothy Sturgeon Key Takeaways 173 Current Conditions and Challenges 176 Concrete Actions 179 Key Outcomes 181 Drivers and Enablers 183 Barriers, Threats, and Challenges 184 Notes 184 Bibliography 185 Chapter 12 Developing Networked Mobility in Vietnam 187 Guillermo Arenas Key Takeaways 187 Current Conditions and Challenges 190 Vietnam at a Crossroads • http://dx.doi.org/10.1596/978-1-4648-0996-5 viii Contents Concrete Actions 194 Key Outcomes 196 Drivers and Enablers 197 Barriers, Threats, and Challenges 198 Bibliography 199 PART 3 Operationalizing the GVC Agenda in Vietnam 201 Chapter 13 Operationalizing the GVC Agenda in Vietnam 203 Richard Record and Daria Taglioni Five Key Reform and Investment Priorities 204 Concrete Policy Actions: An Agenda for Making the Most of Vietnam’s Engagement in GVCs 211 Boxes 6.1 Different Types of Upgrading in GVCs 90 6.2 Challenges and Policy Options for Improving Private Sector Performance 92 9.1 Key Private Actors in ICT GVCs 137 9.2 Examples of Private Workforce Development Initiatives 152 13.1 Vietnam’s Participation in the Trans-Pacific Partnership: What Happens Next? 206 Figures 1.1 Export Growth and Export Market Shares, Vietnam, 2005–14 4 1.2 Decomposing Export Market Shares, Vietnam, 2005–14 5 1.3 Direct and Total Labor Value Added of Exports, 1995–2011 6 1.4 Growth of Domestic Value Added Embodied in Gross Exports, Selected Economies, 1995–2011 9 1.5 Strategic Policy Framework Applied to Vietnam 12 1.6 Eleven Action Agendas 15 2.1 Share of Largest Firms in Total Employment 32 2.2 Ownership Composition of Employment 33 2.3 Vietnam’s Market Concentration Has Fallen across a Majority of Sectors 34 2.4 The Capital-Intensity Gap Is Narrowing 36 3.1 Share of Domestic Services Value Added Embodied in Gross Exports, 2011 43 3.2 Inputs from Services into Manufacturing Exports, 2011 44 3.3 Composition of Domestic Services Inputs into Manufacturing Exports, 2011 45 3.4 Services Trade Restrictiveness Index, ASEAN Countries, 2012 47 Vietnam at a Crossroads • http://dx.doi.org/10.1596/978-1-4648-0996-5 Contents ix 4.1 Manufacturing Trade Costs for Vietnam and Selected Comparators, 2000–10 58 4.2 Agriculture Trade Costs for Vietnam and Selected Comparators, 2000–10 58 4.3 Transport Centrality for Vietnam and Selected Comparator Countries, 1995–2009 59 4.4 Components of Logistics Performance for Vietnam and Selected Comparator Countries, 2007–14 60 4.5 Components of Logistics Performance for Vietnam and Selected Comparator Countries, 2014 61 6.1 Deepening Trade Agreements 85 6.2 Vietnam’s PTA Network 87 6.3 Production Structure in Textiles and Apparel 95 9.1 Vietnam Hardware Trade by Subsector, 2013 138 9.2 Electronics Domestic Value Added as a Percentage of Exports, 2009 139 9.3 Vietnam’s Electronics Exports and Inward FDI, 1995–2009 140 9.4 Average Monthly Salary for Software Engineers, Selected Countries, 2012 145 10.1 Investment Certification Requirements 163 12.1 Vietnam: Average Compensation per Job in the Auto Sector 192 12.2
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