(LUẬN văn THẠC sĩ) structural transformation and economic growth of asia developing countries and vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS STRUCTURAL TRANSFORMATION AND ECONOMIC GROWTH OF ASIAN DEVELOPING COUNTRIES AND VIETNAM Summary version By TRAN THIEN TAI Academic Supervisor: Dr TRAN TIEN KHAI HO CHI MINH CITY, NOVEMBER 2012 TIEU LUAN MOI download : skknchat@gmail.com ABSTRACT This paper investigates the structural transformation and growth of some developing Asian countries and Vietnam, using data extracted from World Development Indicator and Global Finance Development of World Bank from 1985 to 2010 The paper uses polynomial model regression and description statistics method Findings from the paper includes: (1) except Korea and Malaysia, others Asian developing countries are all in the first phase of structural transformation Agriculture sector trends to decrease once GDP per capita increases Industry sector trends to increase once GDP per capita increases Service sector increases once GDP per capita increases; (2) the threshold of structural transformation from the first phase to the second phase is when GDP per capita equals US$ 6,600 per person At that level, sectoral share of agriculture, industry, and services reach 7%, 45% and 48% respectively; (3) Asian developing countries including Vietnam are not all followed the same process and are not homogeneity of structural transformation; (4) compared to Malaysia, Thailand and the Philippines, the share of agriculture in GDP of Vietnam is still high and is the highest in the four countries The share of services in GDP of Vietnam is always the lowest in the four studied countries; (5) the rate of labor distribution in the agricultural sector of Vietnam is high compared to Malaysia, Thailand, and the Philippines and in the opposite direction, the rate of labor in services of Vietnam is low compared to Malaysia, Thailand, and the Philippines; (6) labor productivity in all three sectors of Vietnam are lower than Malaysia, Thailand, and the Philippines but the most inefficient is agricultural sector, followed by the service and industrial Key Words: structural transformation, GDP per capita, growth, Asian developing countries, Vietnam TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENT CHAPTER 1: INTRODUCTION CHAPTER 2: LITERATURE REVIEW 2.1 Theoretical review 2.2 Empirical studies 2.3 Conceptual framework CHAPTER 3: RESEARCH METHOLODOGY 11 3.1 Data 11 3.2 Research methodology 11 CHAPTER 4: EMPIRICAL ANALYSIS OF STRUCTRUAL TRANSFORMATION AND GROWTH 13 4.1 Overview of economic growth of Asian developing countries in period 1985 -2010 13 4.2 Experimental study result of structural transformation Asian developing countries during 1985-2010 16 4.2.1 Result of statistics descriptive model 16 4.2.2 Result of economestric model 21 4.2.3 Structural transformation and labor productivity of Vietnam and acomparision with Malaysia, Thailand and the Philippines 27 CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS 34 5.1 Conclusions 34 5.2 Recommendations 34 REFERENCES 36 TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam CHAPTER 1: INTRODUCTION Some empirical studies show structural transformation process is accompanied with economic growth of developed countries By history record, Kuznets (1971) in Economic of Nations emphasizes that there are six characteristics that every developed country manifested in the process of economic growth One of them is the high rate of structural transformation of the economy Chenery (1979) in Structural Change and Development Policy examines the pattern of development of some developing countries after World War II period The empirical study identifies several characteristic features of development process One of them is the shift away from agricultural to industrial production Asian developing countries, including Vietnam, are under developing process Therefore, they maintain sustainable growth in the last two decades and played a key role in economic growth of the world It is useful to analyze what is the structural transformation process of Asian developing countries including Vietnam? My paper tries to achieve three main objectives: (1) to analyze structural transformation process1 of some Asian developing countries, including China, India, Indonesia, Korea, Malaysia, Nepal, the Philippines, Sri Lanka, Thailand and Vietnam, during 1985-2010; (2) to analyze labor productivity of between Vietnam and Malaysia, Thailand and the Philippines; (3) to implicate ways to improve structural transformation process of Vietnam Therefore, the main questions of this paper research are: (1) how is the structural transformation process of Asian developing countries? (2) is the structural transformation process of Asian developing countries homogenous? (3) what are the differences of structural Structural transformation process is transformation process between sectors in an economy such as the transformation between agriculture, industrial and service sector through time or through development (GDP or GDP per capita) Agriculture sector covers forestry, fishing, hunting and agriculture as a whole; Industrial sector comprise mining, quarrying, manufacturing, construction, electricity, gas, water; Service sector includes all service activities, such as transportation, logistics, communication, whole sale, retail, banking, insurance, real estate, public administration, defense and others services TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam transformation process and labour productivity between Vietnam and Malaysia, Thailand and the Philippines? These questions will be answered upon the analysis in chapter four The paper is continued with following chapters Chapter two recalls the literature review including the theories and empirical studies of structural transformation in the world and Vietnam Chapter three describes the dataset and research methodology Chapter four analyzes the structural transformation process of Asian developing countries and the comparison of structural transformation and labor productivity of Vietnam versus Malaysia, Thailand and the Philippines Base on the main findings identified in chapter four, chapter five will come out with the main conclusions, policy implications and limitations of this research TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam CHAPTER 2: LITERATURE REVIEW 2.1 Theoretical review According to Begg et al (1995), Gross Domestic Product (GDP) can be measured by the formulation: i gdpi   vaij (1) j 1 Where: gdpi is GDP of a country in year i vaij is value added of sector j in year i j includes three sectors of an economy: agriculture, industry and service Solow (1962) uses the Cobb-Douglas production function to form up Solow growth model q=Akα (2) A is multifactor of productivity or technology progress of an economy k is capital per capita of an economy q is output per capita of an economy Equation (2) explains output per capita will be increased significantly once productivity, efficiency or technology change happens to the economy We all know that a market economy tends to allocate resources from less efficient areas to more efficient areas Therefore, this model will support this research of structural transformation in the following sections of this chapter Lewis (1955) develops the two-sector labour surplus model in 1955 In this model, the underdeveloped economy consists of two sectors which are traditional and modern sectors Traditional sector has a surplus of labour while a limited resource of land Its marginal product of labour (MPL) tends to diminish until MPL equal to zero (MPL=0) The proportion of surplus labour in traditional sector will be transferred to the modern sector and makes the modern sector’s output grown The TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam Firgure 10 displays that although the process of economic structural transformation also took place in Vietnam and other countries, but the share of agriculture of Vietnam is always at a higher level than others and the share of the service sector of Vietnam is always lower than other countries The highlight of Vietnam in the industry is from the lowest point of all countries, the share of Vietnam's industry has continued to increase, surpassing the Philippines and very close to Thailand In the aspect of labor allocated to each sector, although the rate of agricultural workers of Vietnam fell from 70% in 1996 to 51% in 2009, but this rate is still very large compared with the rate of agriculture's contribution to GDP was 21% in 2009 70 60 50 40 30 20 10 Agr Ind 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Sectoral Employment share Vietnam 80 Ser Figure 11: Sectoral employment share of Vietnan 1996-2009 Source: Author’s calculation and draw from data of World Bank, 2012 29 TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam % Employment in Agriculture sector 80 70 60 50 40 30 20 10 MYS THA PHL 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 VNM % Employment in Industry sector 40 35 30 25 20 15 10 2007 2008 2009 2008 2009 PHL 2006 2005 2004 2003 THA 2007 MYS 2002 2001 2000 1999 1998 1997 1996 VNM % Employment in Service sector 70 60 50 40 30 20 10 MYS THA PHL 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 VNM Figure 12: Sectoral employment share of Vietnam, Malaysia, Thailand and the Philippines Source: Author’s calculation and draw from data of World Bank, 2012 Firgures 12 shows us the sectoral employment of four ASEAN countries Labor ratio in the agricultural sector of Vietnam is at a very high level compared to 30 TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam Malaysia, Thailand and the Philippines In the industrial sector, corresponding to the growth rate of GDP share, the shift of industry workers also follows a similar trend The industry labor rate of Vietnam has surpassed the Philippines and catched up with Thailand Similar to the agricultural sector, but in the opposite direction is the service sector of Vietnam The labor rate of service sector in Vietnam is always lower than the other countries In terms of sectoral labor productivity of the four countries, I calculated the sectoral labor productivity (US$ per person per year) From database I draw a comparison chart on the labor performance of each sector of the four countries as shown in figures 13, 14, and 15 as below From figures we see that labor productivity of Vietnam is less effective than Malaysia, Thailand and the Philippines in all three sectors In industry, labor productivity of Vietnam in 2009 was US$ 3,892 per person per year, while the numbers of Malaysia, Thailand, and the Philippines were US$ 26,637, US$ 15,144, and US$ 9,671 respectively Similarly in the service sector, labor productivity of Vietnam is also lower than other countries So we can say that the labor productivity of Vietnam is less efficient than Malaysia, Thailand and the Philippines in all three sectors Labor productivity in agriculture sector US$ per person per year 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 MYS THA PHL 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 VNM Figure 13: Labor productivity in agriculture sector of Vietnam, Malaysia, Thailand and the Philippines Source: Author’s calculation and draw from data of World Bank, 2012 31 TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam Labor productivity in industry sector US$ per person per year 35,000 30,000 25,000 20,000 15,000 10,000 5,000 MYS THA PHL 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 VNM Figure 14: Labor productivity in industry sector of Vietnam, Malaysia, Thailand and the Philippines Source: Author’s calculation and draw from data of World Bank, 2012 Labor productivity in service sector 16,000 US$ per person per year 14,000 12,000 10,000 8,000 6,000 4,000 2,000 Series1 Series2 Series3 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Series4 Figure 15: Labor productivity in service sector of Vietnam, Malaysia, Thailand and the Philippines Source: Author’s calculation and draw from data of World Bank, 2012 We see all the three sectors of agriculture, industry, and services of Vietnam are less efficient than Malaysia, Thaland and the Philippines One question posed is that in these three sectors in Viet Nam, which sector is the least effective? Table and figure 16 below show us that in these three sectors, agriculture is the least effective, with labor productivity in 2009 was US$ 793 per person per year, 32 TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam followed by the service sector with US$ 2,636 per person per year and the most efficient in the three sectors is the industry with US$ 3,892 per person per year Table 4: Sectoral labor productivity of Vietnam (US$ per person per year) Year Agriculture Industry Service 1996 264 1,860 1,454 1997 279 1,782 1,353 1998 277 1,947 1,222 1999 278 2,047 1,241 2000 283 2,235 1,310 2001 280 2,115 1,348 2002 300 2,119 1,337 2003 336 2,146 1,417 2004 377 2,312 1,533 2005 435 2,657 1,599 2006 507 2,642 1,737 2007 567 3,227 1,998 2008 785 3,811 2,466 2009 793 3,892 2,636 Source: Author’s calculation from data of World Bank, 2012 Sectoral labor productivity of Vietnam 4,500 US$ per person per year 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 Agr Ind 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Ser Figure 16: Sectoral labor productivity of Vietnam Source: Author’s calculation and draw from data of World Bank, 2012 33 TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS 5.1 Conclusions (1) Except Korea and Malaysia, others Asian developing countries are all in the first phase of structural transformation Agriculture sector trends to decrease once GDP per capita increases Industry sector trends to increase once GDP per capita increases Service sector increases once GDP per capita increases; (2) The threshold of structural transformation from the first phase to the second phase is when GDP per capita equals US$ 6,600 per person At that level, sectoral share of agriculture, industry, and services reach 7%, 45% and 48% repectively; (3) Asian developing countries including Vietnam are not all followed the same process and are not homogeneity of structural transformation; (4) Compared to Malaysia, Thailand and the Philippines, the share of agriculture in GDP of Vietnam is still high and is the highest in the four countries The share of services in GDP of Vietnam is always the lowest in the four studied countries; (5) The rate of labor distribution in the agricultural sector of Vietnam is high compared to Malaysia, Thaland, and the Philippines and in the opposite direction, the rate of labor in services of Vietnam is low compared to Malaysia, Thailand, and the Philippines; (6) Labor productivity in all three sectors of Vietnam are lower than Malaysia, Thailand, and the Philippines but the most inefficient is agricultural sector, followed by the service and industrial sectors 5.2 Recommendations Basing on the findings of this research, I would like to propose the following recommendations to the policy makers of Vietnam: 34 TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam (1) The share of agriculture sector in total GDP of Vietnam is high, the employment share in agriculture is very high and the labor productivity in agriculture is the least efficient, therefore the government should focus and consider on rural development such as selection advantage of crop and livestock in order to improve productivity in agriculture sector therefore release labor from agriculture sector to industry and service sector which are inherently more efficient; (2) Since the industry sector of Vietnam has successfully catched up, the government should consider maintaining the growing of this sector, at the same time continue to promote policies of industrialization, modernization, and equitization to increasingly improve the performance of the industry compared to other countries; (3) Because the service sector of Vietnam is still in low position in comparirion with others ASEAN countries, the government should further expand the market for services, further diversify for its products in services sector; (4) Vietnam's agricultural labor rate is very high, the percentage of workers in the service sector is still low, and the performance of the whole three sectors are still lower than in other countries, therefore the government should research policies to promote the restructuring of labor between sectors and especially to strengthen vocational education policies (human capital investment) to improve labor productivity of Vietnam; (5) Since the GDP per capita of Vietnam is low, the government should encourage enterprises focus and invest on new technology to improve productivity output of all sectors special in agriculture and services; (6) The employment share in agriculture is going to decrease, employment shares in industry and service sectors are going to increase corresponding, and therefore the government should consider migration and urban development policies 35 TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam (LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam(LUAN.van.THAC.si).structural.transformation.and.economic.growth.of.asia.developing.countries.and.vietnam