Vietnam’s growth model Essay:Vietnam economic growth analysis
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Read the article, “Vietnam’s growth model: The special sauce,” from The Economist, September 4, 2021, pages 57-58. Write a report on the following assigned questions in your own words.
Do not merely copy the words or sentences in the article or line up unrelated answers to the assigned questions. You may use as references the article, your textbook, and your class notes. No other print or online sources are allowed. Please include your references using APA format at the end of your report if you cite the article above and/or the textbook.
- What have been the main driving forces of Vietnam economic growth in the past 30 years? What makes the economic growth of Vietnam different from China?
- Vietnam provides subsidies (e.g., corporation tax reductions) to promote import-competing industries. Please analyze the effects of this type of subsidy on domestic producers, consumers, and national welfare.
- Is Vietnam’s current trade pattern consistent with any trade theory that you have learned in Econ 335? Please specify which theory/theorem that you apply and explain why it is (or not) consistent.
- As Vietnam develops, what will happen to the domestic wages and other factor prices? What would be the threat to Vietnam’s economic expansion? What needs to be done for sustaining growth? What would be the comparative advantage for Vietnam in the future?
Answer Preview for Vietnam’s Growth Model Essay
In the past 30 years, Vietnam has experienced significant economic growth, driven by several key factors. One of the main driving forces has been its focus on export-led growth, with the country focusing on developing its manufacturing sector and exporting goods to countries around the world. Another key factor has been the country’s efforts to improve its infrastructure, including investments in transportation, communication, and energy systems.
One aspect that makes Vietnam’s economic growth different from China’s is its focus on developing smaller, more specialized industries rather than trying to compete in all areas. Vietnam has also been more open to foreign investment and has had a more flexible exchange rate policy, which has helped to attract capital and technology to the country.
In order to promote import-competing industries, Vietnam has provided subsidies such as corporation tax reductions. These subsidies can have a number of effects on domestic producers, consumers, and national welfare. For producers, the subsidies can help to reduce the costs of production, making it easier for them to compete with imported goods. This can lead to increased output and employment in these industries. However, it can also lead to higher prices for consumers, as producers may pass on some of the cost savings to them in the form of higher prices. This can lead to a decline in consumer welfare. In terms of national welfare, subsidies can be beneficial if they lead to increased economic activity and employment, but they can also be detrimental if they result in inefficiencies and waste.
Vietnam’s current trade pattern is consistent with the theory of comparative advantage, which states that countries should specialize in the production of goods and services that they are relatively more efficient at producing. Vietnam has a comparative advantage in the production of labor-intensive goods such as textiles and clothing, and this is reflected in its trade pattern, with these sectors making up a significant share of its exports.
As Vietnam continues to develop, it is likely that domestic wages and other factor prices will increase. This could lead to a decline in competitiveness for some industries and may pose a threat to the country’s economic expansion. In order to sustain growth, Vietnam will need to continue to focus on improving its infrastructure, developing new industries, and attracting foreign investment. It will also need to adapt to changes in global demand and the increasing competition from other countries. In the future, Vietnam’s comparative advantage may shift to more capital-intensive industries as the country’s labor costs increase. It will be important for the country to continue to diversify its economy and invest in education and training in order to take advantage of…..
In the past 30 years, Vietnam’s economic growth has been driven by several key factors. One of the main drivers has been the country’s shift towards a more market-oriented economy, which has allowed for increased foreign investment and trade. Additionally, Vietnam’s abundance of cheap labor has attracted a significant number of export-oriented industries, particularly in the manufacturing sector.
One of the main differences between Vietnam’s economic growth and China’s is that Vietnam has relied more on domestic demand and less on exports. This has allowed the country to avoid some of the problems that China has faced with overreliance on exports, such as the impact of global economic downturns.
Vietnam provides subsidies, such as corporation tax reductions, to promote import-competing industries. These subsidies can have a number of effects on domestic producers, consumers, and national welfare. On the positive side, they can help to protect domestic producers from foreign competition, which can allow them to remain competitive in the domestic market. This can, in turn, lead to increased profits and employment for domestic producers. However, subsidies can also have negative effects on consumers, as they can lead to higher prices for domestic goods. Additionally, subsidies can lead to inefficiencies in the domestic market, as they can discourage domestic producers from becoming more efficient and innovative. Finally, subsidies can have a negative impact on national welfare if they result in a misallocation of resources or a decline in export competitiveness.
Vietnam’s current trade pattern is consistent with the theory of comparative advantage, which states that countries should specialize in producing the goods and services that they are most efficient at producing and trade with other countries for the goods and services that they are less efficient at producing. Vietnam’s specialization in labor-intensive manufacturing industries, such as textiles and footwear, is consistent with this theory, as it allows the country to take advantage of its cheap labor to produce these goods at a lower cost than other countries.
As Vietnam develops and its economy grows, it is likely that domestic wages and other factor prices will rise. This could be a threat to Vietnam’s economic expansion if it leads to a decline in the country’s competitiveness in the global market. In order to sustain growth, Vietnam will need to continue to focus on improving its domestic productivity and competitiveness, as well as attracting foreign investment and trade. In the future, Vietnam’s comparative advantage may lie in higher-skilled industries such as technology and services