Using Solow and I–O models to determine the factors impacting economic growth in Ho Chi Minh City, Vietnam

Abstract

This study empirically investigates the determinants of economic growth in Ho Chi Minh City (HCMC) and its industry groups from 2006 and 2015 using the Solow model combined with input–output (I–O) tables. The results show that capital mainly contributes to a strong growth of the economy in HCMC. The findings also indicate an improvement in total factor productivity and its increasing contribution towards HCMC economic growth. In contrast, the contribution of labor towards HCMC economic growth is found to be reduced which transfer its significant role to TFP. This result implies that growth quality of HCMC has been lifted and has based more on human capital. The study also estimates contributing level of productive factors towards the growth of industry groups and backward linkage and forward linkage coefficients of product groups. Therefore, our research has implications for the local government to develop the sustainable economy in the future.