Synthetic Classification of Provinces and Cities in Vietnam as a Guide for Regional Policy

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Vietnam is a country with a relatively high level of regional inequality. The General Statistics Office of Vietnam groups the provinces based on their geographic location. This article presents the classification of the provinces and cities of Vietnam based not only on geography, but also on their socio-economic characteristics, economic structure, and the membership in free economic zones (FEZs). The analysis identifies four groups of provinces and cities: i) highly developed (FEZ members with high GRP per capita and a developed technological industry) ii) developed (FEZ members with high untapped economic growth potential and a highly diversified economic base), iii) moderately developed (with a vast primary sector and high potential for the development of the tourism sector) and iv) less developed (the poorest regions). The article highlights individual provinces, the level of socio-economic development of which (ceteris paribus) will allow them to transfer towards the group of more developed provinces in the near future. In order to reduce inequality in other provinces, we propose to use approaches, which have been successfully implemented in highly developed and developed regions, such as incentives for foreign investors or tax preferences for the development of significant industries in individual provinces.