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Vietnam opened up to the outside world in the early 1990s, and
expected that the massive inflow of foreign direct investment (FDI) would
accelerate economic growth. However, FDI inflow has not reached the
critical mass yet. While various external factors are responsible for
this, the weakness of supporting industries is considered to be one of the
primary factors responsible for this. Competitive supporting industries
are required to attract more FDI into Vietnam, because multi-national
corporations (MNCs) consider them to be an important factor in the
decision to expand FDI, in addition to labor costs.
Based on research in Vietnam,
Mr. Mori will present his analysis of supporting industries, focusing on:
i) the theory of economic growth through development of supporting
industries, ii) MNCs’ demand for local procurement, iii) supply-side
constraints, and iv) how public policy can contribute to removing
obstacles. He assumes that the development of supporting industries in
Vietnam is impeded by two types of barriers: i) the minimum efficient
scale problem and ii) information failure. In addition, he proposes that
appropriate public policies may help domestic supporting industries
overcome these obstacles by promoting technology upgrading. Among various
policy options, the establishment of a collaborative training program
between MNCs and domestic supporting industries is highly recommended.
Workshop Summary
Paper
(PDF867KB)
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Slides (Final,
PDF293KB)
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