Economic growth in provinces throughout Vietnam is anything but uniform. In cooperation with MPDF and Vietnam Chamber of Commerce and Industry, VET discusses why this is the case.
Government agencies and donors working in private sector development in Vietnam have conducted several studies in recent years to identify the drivers and constraints for economic growth in specific cities and provinces. These studies found that marked differences exist between cities and provinces in their business environment and the development of the private sector, which often stem from physical factors such as the quality of infrastructure, geographic location, distance to major markets, and availability of financial and human resources. However, the studies also show that local governance and regulatory issues need to be taken into account.
While a number of cities and provinces have grown rapidly since the beginning of doi moi, others – with similar conditions in terms of geographic location and infrastructure – have grown at a slower pace. And the resulting gap in economic prosperity has tended to widen. For example, despite having broadly equal infrastructure and proximity to seaports and major markets, the economic growth in four southern provinces (Dong Nai, Binh Duong, Long An and Ba Ria Vung Tau) has been far better than in seven northern provinces (Quang Ninh, Hai Duong, Hung Yen, Ha Tay, Bac Ninh, Bac Giang and Vinh Phuc). Although the selected provinces for research do not present a typical picture of how large a gap between provinces but it shows some considerable findings.
Initial findings from a competitiveness index currently being developed to compare economic growth between provinces, taking into account five major initial factors: distance from major markets, quality of infrastructure, availability of human resources, use of information technology and availability of land.
The research raises questions as to what causes provinces with similar competitiveness to have such differing growth rates (what explains the gap between Binh Duong and Nghe An, for example).
One likely explanation is that local governance and the regulatory framework affects the pace of private sector development and economic growth. This can be further broken down into a number of specific issues.
