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2022 | Book

International Trade, Economic Development, and the Vietnamese Economy

Essays in Honor of Binh Tran-Nam

Editors: Prof. Cuong Le Van, Prof. Van Pham Hoang, Prof. Makoto Tawada

Publisher: Springer Nature Singapore

Book Series : New Frontiers in Regional Science: Asian Perspectives

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About this book

This volume spotlights some of the most important economic issues confronting today's emerging developing countries. The topics studied in the book include the importance of productivity to economic growth, international trade and its relationship to productivity; immigration and brain drain; pollution havens, climate change, and the carbon tax; the effectiveness of foreign aid, the efficiency of education, and governance. Written by some of the most respected scholars in their respective fields, the individual chapters apply both economic theory and the most current empirical tools in rigorous but accessible exposition. Researchers can find value in the modeling and empirical techniques that can be applied to other countries and datasets. Policy makers can benefit from the intellectual foundation on which decisions on important issues can be based; and students of international trade, economic development, and environmental economics can gain knowledge of different country settings that give context to their fields of study.

Table of Contents

Frontmatter
Introduction
Abstract
We preview the contents of the book International Trade, Economic Development, and the Vietnamese Economy: Essays in Honor of Binh Tran-Nam with a dedication to Professor Binh Tran-Nam.
Cuong Le Van, Van Pham-Hoang, Makoto Tawada
Efficiency-Inducing Tax Credits for Charitable Donations when Taxpayers Have Heterogeneous Behavioral Norms
Abstract
We consider an economy in which some taxpayers behave in a Kantian way in their donation behavior while others are Nash players. A Kantian taxpayer holds the norm that any suggested deviation from a proposed equilibrium profile would be adopted by him only if, when all members of their community adopted the same deviation, they would all achieve a higher level of welfare. In contrast, a Nash player follows the individual rationality criterion: he would deviate if, assuming all others do not deviate, he would improve his own payoff. We show that if all taxpayers are Nash players, then there is an efficiency-inducing tax credit scheme for charitable contributions. In contrast, if all taxpayers are Kantian, the optimal tax credit for charity is zero. If both types of taxpayers coexist, and the government does not know who is of what type, then it is not possible for the government to induce the first-best outcome, but it must rely on a second-best tax credit scheme.
Ngo Van Long
Trade Liberalization and Profit Tax Reform Under Oligopolistic Vertical Trade
Abstract
This chapter studies the welfare effects of trade liberalization and the accompanied domestic profit tax reform in a vertical trading economy where oligopoly firms in a domestic final good market import intermediate good from a foreign monopolist and compete in either a Cournot or a Bertrand fashion. We show that if the initial protection level is relatively high, governments can ensure higher welfare for consumers and producers by raising profit taxes compensating for a decrease in a government’s revenue caused by a reduction of the tariff on the intermediate good. When the import tariff is already at a low level, the government may not be able to meet that policy goal.
Masayuki Okawa, Tatsuya Iguchi
Properties of the Production Possibility Frontier of Generalized Ricardian Economy with a Pure Public Intermediate Good
Abstract
This chapter investigates the shape of the production possibility frontier (PPF) of an economy where three primary factors, two of which are sector specific, two final goods, and one pure public intermediate good, exist and derives the conditions for a convex portion to appear in the PPF under the Cobb–Douglas type of production functions. The economy considered here includes the Ricardian type of economy treated by Manning and McMillan (1979) and Ricardo and Viner’s economy treated by Clarida and Findley (1992) and Tawada et al. (2020) as special cases in the present analysis.
Makoto Tawada
A Note on the Internationalization Strategies of SMEs
Abstract
In this chapter, we provide an analysis of the internationalization strategies of SMEs. We investigate how the third market size can prevent their internationalization process. Interestingly, when the third market size reaches some thresholds, SMEs do a tariff-jumping as a second best. In particular, when the third market size is large enough, internationalization becomes impossible.
Thanh Tam Nguyen-Huu, Med Kechidi
The Pollution Haven Hypothesis in a Dual Economy
Abstract
The pollution haven hypothesis (PHH) states that economies with weak (strong) environmental standards have comparative advantages in the production of polluting (nonpolluting) products. Most studies on the PHH implicitly assume that developed countries have strong environmental standards. However, concerns about the environment are rising in developing countries as well. Many developing economies are characterized by wage differentials between the urban and rural sectors, and the attendant urban unemployment. Thus, this study examines whether the PHH is valid in a developing economy while focusing on the characteristic features of the labor market.
Shigemi Yabuuchi
Protecting Brain Drain Versus Excluding Low-Quality Workers
Abstract
Applying a simple two-country model, we find that under mutual reaction by each country regarding the productive quality of migrants, the host country may be able to reduce the total number of illegal immigrants by changing the restriction policy toward illegal immigration. On the other hand, the host country has no effective policy method to improve the average quality of immigrants, but the relative population increase in the source country may realize this improvement.
Kenji Kondoh, Kiyoshi Matsubara
Allocation and Effectiveness of Foreign Aid: An Overview
Abstract
This study investigates the nexus between foreign aid and economic outcomes in recipient countries and examines the aid rules to promote its effectiveness. Analyses aim to provide an overview of the two important points in aid literature: aid effectiveness and aid allocation. First, we focus on internal and external factors that can explain why foreign aid is effective in some recipient countries but ineffective in others. Both theoretical and empirical analyses are explored. Second, our work discusses the principal elements influencing aid rules often qualified as suboptimal. Finally, we analyze the criteria and conditions for an optimal allocation of aid, taking into account recipient characteristics and donors’ preferences.
Ngoc-Sang Pham, Thi Kim Cuong Pham
Smarter Teachers, Smarter Students? Some New Evidence from Sub-Saharan Africa
Abstract
We study the effect of teacher subject knowledge on student achievement in mathematics and reading by using a data set from six sub-Saharan African countries. By using an estimation based on within-teacher within-student strategy, we can avoid a potential endogeneity bias. In most estimations and most countries, we do not find a significant teacher knowledge effect. The main reasons are teacher absenteeism and the need to focus on core knowledge. For instance, a high level of teacher absenteeism and low teacher performance in a subset of items that are also administered to students can attenuate the teacher subject knowledge effect on student learning. When the conditions of low absenteeism and high teacher performance are met, teacher subject knowledge can have a significant and positive effect on student achievement.
Nadir Altinok, Phu Nguyen-Van
Social Capital, Income, and Subjective Well-Being in Developing Countries: Evidence from Vietnam
Abstract
Using data from the Vietnam Access to Resources Households Survey in 2012 and 2014, our chapter analyzes the relationship between social capital and well-being from a multidimensional perspective. Our results indicate heterogeneous impacts of social capital dimensions on each measure of well-beings. There is a trade-off between the objective well-being and subjective well-being when people invest in social capital. It is necessary to study the relationship between social capital and individual well-being using a multidimensional approach.
Nguyen Ngoc Minh, Nguyen Ngoc Anh
Value-Added Exports and the Local Labour Market: Evidence from Vietnamese Small and Medium Manufacturing Firms
Abstract
The formation of global value chains (GVCs) has reshaped production processes across countries. This chapter investigates the relationship between GVCs and firms’ employment by using panel data on Vietnamese small manufacturing firms for 2005–2011. The results suggest that increased foreign value added in exports results in higher wages, increased productivity, and a greater share of production workers in domestic small- and medium-sized enterprises. In addition, it brings about a lower share of professionals and makes smaller firms retrain their existing workers. At the same time, domestic value added in the export of intermediate products has negative impacts on employment and increases wages, particularly in medium-sized firms. All of these may come from the increased competition for labour from larger firms.
Duc-Anh Dang, Anh Tran
Why Does Productivity Matter?
Abstract
Productivity is a key concept in economics and crucial for economic growth. By using different theoretical models, we show the role of several kinds of productivity, including the total factor productivity (TFP) and labor productivity.
Cuong Le Van, Ngoc-Sang Pham
Productivity Spillovers from Export Destinations to Domestic Firms: A Networks Analysis
Abstract
An economy can gain productive knowledge through exporting. How much is gained could vary by export destination. Once the information is infused in the economy, that knowledge can spillover to other domestic firms. Using data from the small and medium enterprise surveys for Vietnam, we construct networks based on industry and geography and calculate alpha centrality for each firm. Alpha centrality as a network measure captures both the effect of the external influence, information from the export market, and the centrality of firms within the network. Exporting to Japan and the U.S.A.—or being close to firms that do—results in robust productivity gains, while exporting to the E.U., China, and ASEAN countries does not.
Steven A. Kauffman, Van Pham-Hoang
Lessons from East Asian Growth: Innovation Matters
Abstract
Growing fast as PRC is desired throughout the developing world. But PRC’s growth was neither predicted ex ante nor explained ex post in most theories of economic growth or trade. Left alone in the policy forum, development economists often comment and make comparison with their own economies, for example, Basu and Binh for India and Vietnam. We augment Basu’s discussions to apply as far as possible by comparing with East Asian economies over per capita GDP, back to 1950 or into history, gaining novel perspective.
PRC’s trajectory is often not replicable: lacking market size to bargain like China, on terms about high-speed rail, for Vietnam; hard to reform with TVEs, under current parliamentary institutions, for India.
Studying other East Asian economies with fast growth allows us to ask how much Chinese growth depends on Hong Kong and Taiwan (while India could not, on Goa)? Would PRC’s growth peak out soon? Is China closing in on Korea, like Korea on Japan? Must India forswear its parliamentary democracy for a Chinese trajectory, rather than a Korean or a Japanese one?
We emphasize that innovation, more than imitation, is the root for GDP growth. It is necessary for leapfrogging or graduating from being underdeveloped.
An-Chi Tung, Henry Wan Jr.
Metadata
Title
International Trade, Economic Development, and the Vietnamese Economy
Editors
Prof. Cuong Le Van
Prof. Van Pham Hoang
Prof. Makoto Tawada
Copyright Year
2022
Publisher
Springer Nature Singapore
Electronic ISBN
978-981-19-0515-5
Print ISBN
978-981-19-0514-8
DOI
https://doi.org/10.1007/978-981-19-0515-5