Intersectoral linkages and imports of Vietnam: an input–output approach

Abstract

This study traces the intersectoral linkages or the dependence of industries on one another in Vietnam’s economy within the period of 2000–2012 basing on the input–output analysis. The total linkages—computed using Leontief inverse—are generally employed amongst policymakers as an essential reference in choosing the critical industry. However, for many countries that heavily dependent on imported inputs like Vietnam, total linkages can give an erroneous result. The paper shows how important are the domestic linkages, which is the inverse net of imports, in analyzing the importance of industries in the economy. Constructing the non-competitive input–output tables relying on the assumption that imports are distributed across industries in the same proportion as the gross domestic output of the corresponding industry, the paper finds that there is a considerable divergence between total and domestic linkages. The results imply that import plays a significant role in the intersectoral linkages in the Vietnamese economy. The strength of linkages of some sectors is due to the import utilization effects, but not domestic sectors’ real own ability to create linkages.