Global Value Chain Participation and Labour Productivity among Manufacturing Firms in Vietnam
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Abstract
This study assesses the state of global value chain (GVC) participation
by manufacturing firms in Vietnam and examines the impact of GVC participation
on labour productivity. Utilising firm-level data from the Vietnam Technology and
Competitiveness Survey and Vietnam Enterprise Survey from 2009 to 2018, we
employ panel fixed-effect regression to analyse the dynamics. The findings show that
Vietnam’s GVC participation has been driven mainly by backward rather than forward
linkages, signifying a reliance on foreign inputs for exports. The study found a positive
impact of backward and forward GVC participation on labour productivity. However,
the results show a stark contrast when considering the degree of GVC participation
(i.e. GVC participation index). While forward GVC participation positively impacts
labour productivity, backward GVC participation demonstrates a negative effect. The
results partly reject the learning-to-learn hypothesis while supporting the notion that
productivity improvements in Vietnam are associated with learning-by-exporting and
learning-by-supplying. We suggest that the prioritisation of forward GVC participation
should be accompanied by well-designed backward participation strategies to promote
labour productivity. The study concludes with a few policy implications.
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