Inter-Regional Ripple Effects of Investment and Export in Vietnam :

Abstract

Vietnam is deepening economic relations with East Asian countries because of economic growth after adoption of the economic reform policy called Doimoi. Economic analysis of Vietnam needs to consider such economic linkages, but there are few empirical studies on Vietnamese inter-regional relations. This paper aims to analyze the industrial and economic inter-linkages between Vietnam and other East Asian countries. We estimated an expanded version of the Asian Inter-regional Input-Output (E-AIRIO) table and measured induced production caused by investment and export in view of repercussion effects that raise Vietnamese production through inter-regional trade by reflexive ways in other countries.The simulation results demonstrate that, first, the influence of Vietnamese investment and export is not large when compared with China, but is not negligible. Second, the repercussion effects of investment and export in Vietnam were respectively 10% and 20% of the total induced production. Third, Thailand also received similar effects from East Asian countries, but Thai repercussion effects via only Vietnam were less than 1% of the induced production. Fourth, among other East Asian countries, Japan experienced the greatest amount of ripple effects from Vietnam.From the above results, we conclude that the economic development policy should consider repercussion effects, and policy coordination among East Asian countries is important for steady growth. To build such policy coordination, inter-regional I/O tables like E-AIRIO can provide useful information.JEL Classification: Q27, Q42, R15