Transition to a market economy, foreign direct investment and export performance in Vietnam

Author name: 
Prema-chandra Athukorala
Nguyen Trung Kien

This chapter examines emerging patterns of foreign direct investment and trade in the Vietnamese economy in the context of its transition from central planning to a market economy over the past three decades. Following a stage-setting overview of policy reforms, it analyses the role of foreign direct investment in outward orientation of the manufacturing sector by linking it to the rapidly-evolving East-Asia-centred global production networks. The indications are specialisation in labour intensive talks within global production networks of electronics and electrical goods is going to play the dominant role in expanding manufacturing exports from Vietnam in years to come. The analysis brings into sharp relief the pivotal role of concurrent liberalisation of foreign investment and trade policy regimes, albeit in a constrained fashion, in the process of economic transition in this era of economic globalisation.

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