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Privatization and poverty reduction in Vietnam: optimal choices and its potential impacts
[working paper]
Corporate Editor
Partnership for Economic Policy (PEP) Research Network
Abstract Since its transition from a centrally planned economy to a market economy, Vietnam has been under pressure to reduce the size of the state-owned sector. In this process, the private sector has emerged. The objective of this paper is to examine how the privatization could contribute better to economi... view more
Since its transition from a centrally planned economy to a market economy, Vietnam has been under pressure to reduce the size of the state-owned sector. In this process, the private sector has emerged. The objective of this paper is to examine how the privatization could contribute better to economic growth and hence further accelerate poverty reduction in Vietnam. We use the multi-sectorial integrated activity analysis model, and apply it to the data of the Vietnamese economy in 2007 to measure the impacts of ownership restructuring on economic growth. If labour and capital could reallocate across sectors and type of ownership, what would be the optimal allocation of activities and the feasible level of domestic final demand? Factor inputs are capital and four types of labour, namely technicians, high skilled, low skilled and unskilled workers. The model keeps track on asymmetric mobility of labour endowments by skill levels. Main contributions of this paper are fourfold. First, we demonstrate that that at the optimum, privatization does not mean to weaken the economic power of state sector. Second, we propose a specific pattern of SOE reform for Vietnam. Third, alternative experiments on the mobility of labour to shows that there is a trade-off between further privatization toward economic efficiency gain and job-creation in Vietnam, which means privatization does not contribute to job creation. Last, the paper shows that current skill situation of Vietnam's labour force will be a 'bottle neck' for Vietnam economic growth in the near future.... view less
Keywords
Vietnam; transition; economic growth; economic reform; privatization; combating poverty; economic policy; Southeast Asia; developing country
Classification
National Economy
Sociology of Developing Countries, Developmental Sociology
Free Keywords
transition economy; general equilibrium
Document language
English
Publication Year
2012
Page/Pages
29 p.
Series
MPIA Working Paper, 2012-02
Status
Primary Publication; reviewed
Licence
Deposit Licence - No Redistribution, No Modifications