How Productivity and Trade Liberalization Can Affect the Economies of Developing Nations is Illustrated by the Vietnamese Manufacturing Sectors Case
This article proposes a model to examine the impact of trade liberalization on productivity growth in developing countries, exemplified by Vietnam, which is positioned at a technological distance from the frontier. Built upon the Schumpeterian framework and Total Factor Productivity (TFP) analysis,...
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| Format: | Article |
| Language: | English |
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Vilnius University Press
2024-05-01
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| Series: | Organizations and Markets in Emerging Economies |
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| Online Access: | https://www.zurnalai.vu.lt/omee/article/view/31898 |
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| author | Nguyen Dac Dung |
| author_facet | Nguyen Dac Dung |
| author_sort | Nguyen Dac Dung |
| collection | DOAJ |
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This article proposes a model to examine the impact of trade liberalization on productivity growth in developing countries, exemplified by Vietnam, which is positioned at a technological distance from the frontier. Built upon the Schumpeterian framework and Total Factor Productivity (TFP) analysis, the study illustrates that free trade can directly influence the technological gap of a small developing nation by necessitating the importation of all intermediate goods from its dominant trading partner, a developed country. Moreover, trade liberalization has a negative impact on Vietnam’s productivity growth, with domestic competition and trade barriers emerging as significant factors. Additionally, the research concludes that the national economic policies of Vietnam during the 2016–2020 period were ineffective, partially attributed to the failure of state-owned enterprises. As a result, international trade openness may lead to enduring adverse consequences for smaller developing countries, like Vietnam, and serves as a noteworthy example of diminishing innovation.
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| format | Article |
| id | doaj-art-5c9aa138a56248c080fe97bf1d248547 |
| institution | Kabale University |
| issn | 2029-4581 2345-0037 |
| language | English |
| publishDate | 2024-05-01 |
| publisher | Vilnius University Press |
| record_format | Article |
| series | Organizations and Markets in Emerging Economies |
| spelling | doaj-art-5c9aa138a56248c080fe97bf1d2485472025-02-11T18:16:43ZengVilnius University PressOrganizations and Markets in Emerging Economies2029-45812345-00372024-05-01151(30)10.15388/omee.2024.15.6How Productivity and Trade Liberalization Can Affect the Economies of Developing Nations is Illustrated by the Vietnamese Manufacturing Sectors CaseNguyen Dac Dung0https://orcid.org/0000-0002-5076-0257Thai Nguyen University of Economics and Business Administration This article proposes a model to examine the impact of trade liberalization on productivity growth in developing countries, exemplified by Vietnam, which is positioned at a technological distance from the frontier. Built upon the Schumpeterian framework and Total Factor Productivity (TFP) analysis, the study illustrates that free trade can directly influence the technological gap of a small developing nation by necessitating the importation of all intermediate goods from its dominant trading partner, a developed country. Moreover, trade liberalization has a negative impact on Vietnam’s productivity growth, with domestic competition and trade barriers emerging as significant factors. Additionally, the research concludes that the national economic policies of Vietnam during the 2016–2020 period were ineffective, partially attributed to the failure of state-owned enterprises. As a result, international trade openness may lead to enduring adverse consequences for smaller developing countries, like Vietnam, and serves as a noteworthy example of diminishing innovation. https://www.zurnalai.vu.lt/omee/article/view/31898trade liberalizationopen economy macroeconomicsproductivity growthWTOVietnamese manufacturing |
| spellingShingle | Nguyen Dac Dung How Productivity and Trade Liberalization Can Affect the Economies of Developing Nations is Illustrated by the Vietnamese Manufacturing Sectors Case Organizations and Markets in Emerging Economies trade liberalization open economy macroeconomics productivity growth WTO Vietnamese manufacturing |
| title | How Productivity and Trade Liberalization Can Affect the Economies of Developing Nations is Illustrated by the Vietnamese Manufacturing Sectors Case |
| title_full | How Productivity and Trade Liberalization Can Affect the Economies of Developing Nations is Illustrated by the Vietnamese Manufacturing Sectors Case |
| title_fullStr | How Productivity and Trade Liberalization Can Affect the Economies of Developing Nations is Illustrated by the Vietnamese Manufacturing Sectors Case |
| title_full_unstemmed | How Productivity and Trade Liberalization Can Affect the Economies of Developing Nations is Illustrated by the Vietnamese Manufacturing Sectors Case |
| title_short | How Productivity and Trade Liberalization Can Affect the Economies of Developing Nations is Illustrated by the Vietnamese Manufacturing Sectors Case |
| title_sort | how productivity and trade liberalization can affect the economies of developing nations is illustrated by the vietnamese manufacturing sectors case |
| topic | trade liberalization open economy macroeconomics productivity growth WTO Vietnamese manufacturing |
| url | https://www.zurnalai.vu.lt/omee/article/view/31898 |
| work_keys_str_mv | AT nguyendacdung howproductivityandtradeliberalizationcanaffecttheeconomiesofdevelopingnationsisillustratedbythevietnamesemanufacturingsectorscase |