Title_ What are Good Candidates for Vietnam’s Economic Growth Drivers? A Discussion of Services, Informality and Economies of Scope

Author_ Adam FFORDE

Pages 29-54

Abstract_ This paper argues that more attention to economies of scope, especially in services production is needed to explain patterns of economic growth in Vietnam since the early 1990s. Existing studies have mistakenly focused on industrialization as a key growth driver, when contrary to policy, there has been servicization. By surveying some of the large relevant literature and data and discussing the resulting conceptual tangles, this paper argues that this mistake is in fact extremely common in analyses of global patterns of economic development. Other frameworks are clearly needed; therefore, it also considers the idea that analysis of Vietnam’s economic growth should examine potential for economies of scope in traditional family joint production. It is argued that cultural factors support rational decision-making at this level despite absence of a clear cost function, and that this could help explain success and servicization. It then adds-in the issue of informality, to bolster a provisional argument that exploitation of economies of scope, especially in informal services sectors, offer strong explanations for Vietnam’s rapid economic growth after the emergence of a market economy, and the slowdown from around the middle of the ‘noughties’. Further research is clearly needed, both into what caused Vietnam’s ‘economic miracle’ and why the expectation that it was industrialization came to dominate policy analysis.

Keywords_ Vietnam, Transition, Economic Growth, Structural Change, Services Sector, Globalization, Economies of Scope