Phát triển công nghiệp hỗ trợ và tăng trưởng kinh tế việt nam trường hợp ngành điện tử ABSTRACT 20 11 vu thanh huyen

MINISTRY OF PLANNING AND INVESTMENT

MINISTRY OF EDUCATION AND TRAINING

CENTRAL INSTITUTE FOR ECONOMIC MANAGEMENT

VU THI THANH HUYEN

SUPPORTING INDUSTRY DEVELOPMENT AND
VIETNAM’S ECONOMIC GROWTH: A CASE OF
ELECTRONIC SECTOR

Major: Development Economics
Code: 9 31 01 05

SUMMARY OF DOCTORAL DISSERTATION

Hanoi - 2018


The dissertation is accomplished in:
Central Institute for Economic Management

Scientific supervisors: 1. Dr. Nguyen Thi Tue Anh
2. A/Prof.Dr. Nguyen Thi Minh

Reviewer 1: A/Prof.Dr. Nguyen Ngoc Son
Reviewer 2: A/Prof.Dr. Bui Quang Tuan
Reviewer 3: Dr. Truong Thi Chi Binh

The dissertation will be defended at Dissertation Evaluation Committee at

Institute level to be held in Central Institute for Economic Management at
(time) ................................................................

Access to the dissertation is available at:
- Library of Central Institute for Economic Management
- Vietnam National Library, Hanoi


1
INTRODUCTION
1. Rationale
Vietnam’s economic growth (EG) has shown signs of stagnation
in the past 10 years. The country’s growth model has revealed various
economic troubles. Besides, that Vietnam is participating more
profoundly in international economic integration process and Industrial
Revolution 4.0 is taking place eagerly has created both opportunities
and challenges to the economy. In this context, developing supporting
industry is seen as one of the solutions to take opportunities, remove
challenges and enhance economic growth quality.
Electronic industry (EI) is regarded as a fundamental production
sector in a national economy. In Vietnam, EI is experiencing rapid growth,
mainly because it has attracted big investments from multinational
corporations, which have made considerable contributions to export values
of the entire sector. However, Vietnam’s supporting industry (SI) has not
yet met the development demand of the electronic sector (ES), resulting in
the low added values created by the sector and its modest contribution to
national economic growth.
Therefore, a study on the impact of SI development on EG to
suggest solutions to develop SI to promote EG in case of electronic
sectors becomes highly significant.

2. Dissertation significance
Theoretical significance
The dissertation helps to build up and complete theoretical frames
on analyzing the situation of SI to electronic sector (ES) and the
impacts of SI development on EG, investigate factors affecting the
relations between SI development and EG in case of ES so as to create a
foundation for theoretical references for other specific cases in future
research.


2
Practical significance
Based on the analysis and evaluation of the situation and impacts
of developing SI for ES on Vietnam’s EG, the dissertation proposes
some solutions to promote the development of SI for ES so as to
promote EG in Vietnam.
CHAPTER 1. RESEARCH REVIEW AND RESEARCH
DIRECTIONS ON SUPPORTING INDUSTRY DEVELOPMENT
AND ECONOMIC GROWTH IN CASE OF ELECTRONIC
SECTOR
1.1. Review of domestic and foreign research on supporting
industry and economic growth in the case of ES
1.1.1. Domestic research
1.1.1.1. Research on supporting industry and SI development
Regarding the concepts and scopes of SI, Nguyễn Thị Xuân
Thúy (2005) proposes the definition of SI in Vietnam as a group of
industrial activities to promote intermediate inputs (including
components, spare parts and tools to produce these components and
parts) for assembly and processing industries. Other studies, such as
those by Nguyễn Thị Dung Huệ (2012), Hà Thị Hương Lan (2014), etc.,

present the definition where “SI are industries which produce materials,
spare parts, components, semi-products for production and assembly
industries to make finished products as production means or consumer
products”.
Regarding features of SI, according to Hoàng Văn Châu (2010),
the typical features of SI include multi-level; links according to
production procedures, regions and dependence on the main industries;
diversity in technology and technological levels; attracting a large
number of enterprises, especially small and medium ones.


3
Regarding factors promoting the development of SI, according
to Vietnam Development Forum (2007), these factors include: market
size, high-quality industrial human resources; tax incentives; policy
environment; information and awareness gaps; industrial and safety
standards; development of raw material production industries. Trần
Đình Thiên (2012) supplements other factors determining the
development of SI, including competitiveness, etc.
Regarding the criteria to evaluate the development level of SI,
Hoàng Văn Châu (2010) introduces a set of 5 criteria to evaluate the
development of SI including: the number of SI enterprises; the scales of
SI enterprises; the technological level of SI enterprises; the links
between SI enterprises and customers and suppliers; the level of
response of SI to main production industries.
1.1.1.2. Research on the relations between SI development and EG
Nguyễn Thị Xuân Thúy (2005) believed that SI development will
promote industrialization and foreign investment attraction, so that
Vietnam can compete with China. According to Hoàng Văn Châu
(2010), SI is the foundation for the implementation of industrialization

and modernization process. To economic growth (EG), SI contributes to
long-term EG. According to Lê Xuân Sang, Nguyễn Thị Thu Huyền
(2011), SI is the direct momentum to create added values to the
industry, raise competitiveness of the main industrial products and
accelerate the industrialization process.
Regarding methods to evaluate the contributions of SI to EG
Domestic research has just presented theoretical arguments; no
study has investigated nor evaluated the contributions of SI to
Vietnam’s EG.
However, to measure the impacts of an industry on the entire
economy, some research has applied input-output table method to


4
calculate the spillover effects and linkages of industries on Vietnam’s
economy. According to Nguyễn Mạnh Toàn and Nguyễn Thị Hương
(2013), input-output analysis to calculate linkage indexes is an approach
commonly used in many countries to analyze the industrial impacts. In
their research, Bùi Trinh et al. (2011) use input-output table published
by General Office of Statistics and fundamental theories of W.Leontief
and J. Keynes to analyze production-promoting indexes and importspromoting indexes based on the structures of the economy.
To evaluate the affecting factors to growth and productivity of an
industry, one of the widely-used methods is Cobb-Douglas production
function and regression method. Specifically, the research by Chu Thị
Thu and Hoàng Thị Dung (2013) uses Cobb-Douglas production
function to analyze factors affecting coal mining output in Vietnam. At
enterprise level, using production function and panel data regression
method with fixed effects, Phạm Thế Anh and Nguyễn Đức Hùng
(2013) analyze and evaluate the impacts of business environment
mechanism on performance of enterprises in Vietnam.

1.1.2. Foreign research
1.1.2.1. Research on SI and SI development in nations
Definitions of SI
Ratana

E. (1999) defines

SI as

enterprises producing

components, spare parts that are used in the final assembling stages of
industries such as automobile, machinery, electronics. Meanwhile,
according to Ryuichiro Inoue (1998), in broad senses, SI produces
components, spare parts and basic materials. In narrow senses, it can be
seen that SI is the process of material transformation, including molding
and stamping, casting, forging, plating, soldering, engineering, heating
and plastic processing.


5
As for conditions to develop SI, Keiko Morisawa (2000) believe
that demand for components and spare parts is the most important
condition for the development of SI while the development in
technology, material industry, capital mechanism are also necessary
requirements. Besides, according to Ryuichiro Inoue (1998), the
development of human resources, mechanism and strategies, policies
and programs, technological transfer are also necessary factors to the
development of SI in ASEAN countries.
1.1.2.2. Research on the relations between SI and EG

Contributions of SI to EG
The roles of SI in economic growth have been affirmed in the views
of some foreign researchers as follows:
Michael Porter (2012) claims that one of the decisive factors to a
country’s comparative advantages in an industry is the existence of
supporting

and

relevant

industries

and

their

international

competitiveness. Junichi Mori (2005) states that the roles of SI in EG
are reflected by the driving of FDI to the country, the attraction of
investments from multinational corporations, the promotion of FDI
accumulation, the acceleration of EG in the long term.
According to Kaldor (1966), there is a close relation between the
growth in added values of an industry and the growth in GDP. Ha-Joon
Chang et al. (2013) clarify the roles of processing – manufacturing
industries as follows: promoting productivity growth; producing inputs
for production; renewing organizations; creating demand for high-yield
activities in other industries; having higher commercial values than
agriculture and service. Besides, research by Adam Szirmai (2009,

2010, 2012) indicates that production and industrialization process are a
momentum to growth in developing economies.
Regarding methods to evaluate the contributions of SI to EG


6
To calculate the spillover effects and the linkages of industries on
EG, some studies use input-output table methods.
Rohana

bt

Kamaruddin,

Zakariah

Abdul

Rashid

and

Kamaruzaman Jusoff (2008) use I-O model to investigate growth
sources and key industries of Malaysian economy in the 1978-2000
period. Loo sze Ying (2013) use I-O method to test the importance of
processing and manufacturing industries in Malaysian economic
growth.
At industry/enterprise level, to study the affecting factors to
growth and productivity of industry/enterprise, many research projects
have used regression method based on the theory of production function

to come to research conclusions. For instance, the research by Chu-Yao
Tseng (2008) on the impacts of internal R&D, import technology on
economic added values in case of Taiwan electronic sector, the research
by Daniel Gonçalves and Ana Martins (2016) on factors determining
growth in Portuguese processing and manufacturing industry, etc.
1.1.3. Summary of not-yet-researched issues
(i) Research on supporting industry development
In terms of theories, the theoretical grounds on the development
of SI in general and SI for electronic sector (ES) in particular have not
reached agreements in the concepts and scopes of SI; the criteria to
evaluate the development have not matched the concepts and
fundamental issues of development under the approach of development
economics.
In terms of reality: previous research has not highlighted the
situation of development, difficulties and limitations in the operations
of SI enterprises in connection with specific main industries (for
example, the electronic sector).


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(ii) Regarding the relations between SI development and EG,
previous studies have been limited to theoretical arguments rather than
quantified the impacts of the development of SI in general and SI for
electronics in particular on some macro-economic indicators such as
economic growth, export growth, FDI attraction, etc.
Regarding methods to evaluate the impacts: to evaluate the
impacts of an industry on EG, 2 main methods are often applied by
domestic and foreign researchers: Input-output table method (I/O) and
econometrics method (regression).
(iii) Regarding factors affecting the relations between SI

development and EG: previous studies have looked into factors
affecting SI development but none of them has investigated the
affecting factors to the development of SI in relations with EG.
1.2. Dissertation’s research directions
1.2.1. Research goals
General research goals: Finding out theoretical and practice
evidence on the impacts of SI development on EG in the case of ES; on
that basis suggesting some solutions and proposals to promote the
development of SI for Vietnam’s ES towards the goals of fostering EG.
1.2.2. Dissertation’s research questions
(i) In terms of theory: clarifying theoretical grounds on SI development,
including: what are the development of SI and development of SI for
electronics; what criteria can be used to evaluate the development of
SI?; What are the roles of SI development in promoting EG in case of
electronics? What factors of the development of SI for electronics
promote EG?
(ii) In terms of reality: How have SI for electronics developed in
Vietnam in recent years? How does the development of SI affect
Vietnam’s EG? What are affecting factors of the development of SI for


8
electronics to Vietnam’s EG? What should be done to develop SI for
electronics to meet the demand of Vietnam’s ES and promote EG?
1.2.3. Research subjects and scopes
The research subject of the dissertation is the one-way relations
(impacts) between SI development and Vietnam’s EG – a case study in
Vietnam’s ES; at the same time the situation of development of SI
enterprises for electronics in Vietnam.
Research scope

(i) In content: the theories are generally researched for SI, the
reality merely focuses on the development of SI for Vietnam’s ES.
(ii) In research period:
To analyze the development of SI for Vietnam’s ES, the dissertation
only focuses on the 2011 – 2016 period.
To analyze the impacts of SI development on Vietnam’s EG using
input-output table method, the dissertation uses input-output tables of the
years 2007, 2012 and 2016.
To analyze the impacts of SI development on ES, the dissertation uses
the set of data from the general survey on enterprises in the two periods of
2006 – 2015 and 2012 – 2015.
1.2.4. Research approaches, hypotheses and methods
1.2.4.1. Research approaches
To gain the already-set research goals, the PhD learner
approaches the research from the following angles: approach from
development economics; approach from historic/logic view; approach
from theories to reality; approach from multi sectors; approach from
production and supply chains.
1.2.4.2. Main research hypotheses
Based on research approaches, the research questions that the
dissertation needs to be tested quantitatively via the following


9
equivalent hypotheses:

H1: SI for ES have positive impacts on

production values, added values of the entire economy; H2: The
development of SI for ES increases the spillover linkages to the

economy; H3: The development of SI for ES has positive impacts on the
development of major manufacturing industries in the economy; H4:
The development of SI for ES has spillover effects on imports; H5: The
development of SI for ES has positive impacts on the income of
employees; H6: The development of SI has positive impacts on the
development of the major ES of Vietnam.
1.2.4.3. Research methods
Common data analysis methods in economic research are used in this
dissertation, including: Theory synthesis and analysis method; Descriptive
statistical method; Comparative statistical method; Input-Output table
method (I – O model); Econometrics method.
CHAPTER 2. THEORETICAL GROUNDS AND METHODS TO
EVALUATE THE IMPACTS OF SUPPORTING INDUSTRY
DEVELOPMENT ON ECONOMIC GROWTH: A CASE OF
ELECTRONIC SECTOR
2.1. Fundamental theories on the relations between supporting
industry development and economic growth
2.1.1. Related concepts and theories
2.1.1.1.

Economic growth

As stated in Development Economics Course book (National
Economics University, 2013), EG is the increase in average per-capita
income/products or national income/products. EG is measured via
changes in national income (Gross output (GO), Gross Domestic
Products (GDP), Gross National Products / Gross National Income
(GNP/GNI), etc.). Among these, the dissertation uses GDP growth as a

10
measurement indicator. Besides, to evaluate the roles of supporting
industry development in EG, the PhD learner also uses extra indicators
including factors affecting gross supply and demand.
2.1.1.2. Supporting industry development
Concept of SI: In the scope of this dissertation, the PhD learner
chooses to adopt the definition of SI as “industries which product
fundamental materials, components, spare parts, semi-products to
provide to assembly industries such as automobile, electricity,
electronics, etc.”
Concept of SI development: SI development is the increase in
output scale; together with the changes in industry structure and the
advancement in capacities of supporting industry enterprises.
Concept of SI for electronic sector: SI for electronic sector is
industries producing fundamental materials, components, spare parts,
semi-products to provide to electronic assembly industries, etc.
Features of SI and SIs for electronic sector
First, the multi-level of SI; Secondly, links according to production
procedures, regions and dependence on the main industries; Thirdly,
diversity in technology and production levels; Fourthly, attracting a
large number of enterprises, especially small and medium ones.
Besides, SI for electronic sector has the additional typical
features as follows: Firstly, the life cycle of electronic products is short,
thereby demand for products in electronic SI changes rapidly; Secondly,
production of electronic SI depends largely on the development of
science and technology; Thirdly, electronic components can be
categorized into two groups: small components and big machine
components.
Measuring the development of supporting industries

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1. Criteria reflecting changes in quantity and output scale of supporting
industry: the number of enterprises; the scales of enterprises; the
business and production performance of enterprises.
2. Criteria reflecting changes in structure: can be expressed via the
correlations between sources of supply, including: imports, internal
sources, domestic sources.
3. Criteria reflecting the development in production capacity of
supporting industry enterprises: Technological qualification and
organizational renewal; The linkages between supporting industry
enterprises and customers and suppliers.
2.1.2. Theories on the relations between supporting industry
development and economic growth
2.1.2.1. Theory of Kaldor
Kaldor’s first growth rule (Kaldor, 1966) can be summarized in a phrase
"industrial production is the momentum of growth" while his second
rule (also known as Verdoorn rule) reflects the relations between
quantity growth and productivity growth in the production of processing
and manufacturing sector.
2.1.2.2. Theories of Penélope pacheco-lópez and a. p. Thirlwall
In an open economy of the developing countries, it is apparent
that there exist close relations between output growth of processmanufacturing industry and export growth, between export grwoth and
GDP growth.
2.1.2.3. Other theories
Firstly, SI plays an important role in raising productivity of the
economy; Secondly, it can attract and drive investment flows, especially
FDI; Thirdly, it can promote exports; Fourthly, it has spillover effects
and linkages; Fifthly, it can ensure the autonomy for the economy,
restrict trade deficits; Sixthly, SI development can raise competitiveness

12
and added values for the main industrial products and the entire
economy.
2.2. Analysis frame of the impacts of supporting industry
development on economic growth in the case of electronics and
methods to evaluate the impacts
2.2.1. Analysis frame
 Firstly, the development of SI for electronics plays an important
role in raising productivity and efficiency of the economy.
 Secondly, the development of SI for electronics plays the role of
attracting, orienting and maintaining investment capital, especially FDI.
 Thirdly, the development of SI for electronics can promote
exports
 Fourthly, the development of SI for electronics has spillover
effects and linkages with other industries in the economy.
 Fifthly, the development of SI can restrict trade deficit while an
underdeveloped SI may make imports increase.
 Sixthly, the development of SI can improve the competitiveness
and added values for the main ES and the entire economy.
2.2.2. Methods to evaluate the contributions of supporting industry to
economic growth
Qualitative methods such as descriptive statistical, comparative
and contrast, etc. are used to analyse the situation of supporting industry
development, on that basis, it is possible to evaluate the impacts of the
industry on productivity increase via technological renovation,
organizational reforms, FDI attraction and export promotion.
Quantitative methods: the input-output model and econometrics
model.

2.2.2.1. Input-output model (I/O)


13
Basic relations:

( A d  A m ). X  Y d  Y m  M  X
 A d . X  Y d  A m . X  Y m  M  X (1)

Where:

Ad.X is the vector of intermediate costs of domestically-produced
products;
Am.X is the vector of intermediate costs of imported products;
Yd is the vector of final demand for domestically-produced products;
Ym the vector of final demand for imported products (including the final
individual consumption, final state consumption, accumulated assets
and exports).
Import demand is divided into 2 objectives: demand for
production (Am.X) and demand for final consumption (Ym) or:

A m . X  Y m  M , in that case, equation Khi đó, equation (1) can be
reformulated as:

A d .X  Y d  X
 X  ( I  A d ) 1 .Y d (2)
Applying input-output model to analyze spillover effects:
calculating coefficients of impacts of SI on production value;
coefficients of impacts on added value, and calculating backward
linkages and forward linkages, spillover effects on imports, spillover

effects on income of employees.
2.2.2.2. Econometrics method
The overall equation to evaluate the impacts of SI on the
development of electronic industry is as follows:
log( YCNDT )  log( A)   log( K )   (log L)   log( YCNLKDT )   log( YCNHTK )  Xi

Where:
YCNĐT: revenue of the electronic industry; A: other factors
affecting the revenue of the electronic industry; K: total capital; L:


14
number of laborers; YCNLKĐT: revenue of electronic components
production industry; YCNHTK: revenue of other SI; Xi: Control variables
added to the model such as market size; labor quality; factors related to
infrastructure, institution, policies; variables of enterprise characteristics
(enterprise scale, export/not export); etc.
2.3. Affecting factors to the promotion of economic growth of
electronic supporting industry development

Firstly, market volume; Secondly, quality of industrial hr;
Thirdly, infrastructure; Fourthly, policy system; Fifth,
information system; Sixthly, the nation's advantage in the EI
Value Chain; Seventhly, issues related to competitiveness and
business management
2.4. Experience in electronic supporting industry development in
some countries and lessons for Vietnam
2.4.1.

Experience of some countries in the world

2.4.1.1. Experience from Thailand
2.4.1.2. Experience from Malaysia
2.4.1.3. Experience from China
2.4.2. Some lessons for Vietnam
(i) Developing SI in close connection with small and medium
enterprises; (ii) developing SI together with measures to attract
investment, especially FDI, to SI; (iii) paying attention to supporting
policies on technological innovation; (iv) prioritizing the improvement
of industrial human resources; (v) identifying groups of main prioritized
industries; (vi) increasing the linkages between relevant parties; (vii)
caring about trade promotion programs; building up information
system, etc.


15
CHAPTER 3. IMPACTS OF SUPPORTING INDUSTRY
DEVELOPMENT ON VIETNAM’S ECONOMIC GROWTH: A
CASE OF ELECTRONIC SECTOR
3.1. Overview of the development of manufacturing industry and
Vietnam’s economic growth
In the past 10 years, Vietnam’s EG has leveled off and tended
to decrease, especially in the period from 2005 to 2012. Since 2013,
GDP growth rate tends to recover compared to previous period but the
growth tendency has not been really stable. In terms of contribution
structure, in the 2011 – 2016 period, processing-manufacturing industry
accounted for 13.5% of GDP, lower than that in the 2005 – 2010 period
(which made up for 17.9%). However, in terms of growth rate of
industries, process – manufacturing remains the leading industry.
Regarding the contributions of processing-manufacturing industry to

economic growth quality: processing-manufacturing industry attracts
most of the FDI and contributes largely to Vietnam’s export growth. In
the past 5 years, processing-manufacturing industry is regarded as
gaining good growth in both quality and quantity, therefore it has made
considerable contributions to the rate and quality of the growth of the
economy. However, Vietnam’s processing-manufacturing industry still
reveals many limitations: it is inclined to exploiting natural resources to
get raw materials, so it does not bring high added values to the economy
and restricts the economic growth quality.
3.2. Situation of the development of supporting industry for
Vietnam’s electronic sector
3.2.1. Overview of the development of Vietnam’s electronic sector
Vietnam’s electronic industry has developed rapidly since 2010.
By the end of 2016, the number of enterprises in the industry was 1145,
attracting 497,037 laborers. Most electronic enterprises are small and


16
medium sized, causing lots of difficulties to the innovation and
advancement of technology.
In terms of imports-exports: Exports of electronic products of
Vietnam have experienced quite strong growth. Particularly, importexport turnover of Vietnam’s electronic sector accounts for a quite high
proportion in the total import-export of the country.
In terms of FDI attraction, Vietnam’s ES plays an important
role in attracting FDI capital. However, most of the investment in
electronic industry is in the form of 100% foreign capital while jointventure, especially partnership contract, account for a very low
percentage. This reflects the linkages between FDI enterprises and
domestic enterprises.
3.2.2. Situation of the development of supporting industry for
electronic sector

3.2.2.1. Changes in the quantity and output scale of supporting industry
About the number of enterprises: the percentage of enterprises
producing components/the total number of electronic enterprises is
53.28%. This percentage indicates that Vietnam’s ES is not well
developed. About the scale of electronic SI enterprises: most of SI
enterprises are small and medium sized in lack of capital, technology
and high-quality human resources.
3.2.2.2. Changes in the structure of supporting industry
The ratio of domestic supplies to assembly companies is low,
mostly done by foreign-invested enterprises. Domestic enterprises
only supply simple components with low technological content and
added values such as packaging; material, plastic and metal, etc.
3.2.2.3. Advancement in the production capacities of supporting
industry enterprises


17
As for innovating technology in SI production, generally,
supporting industry enterprises have made efforts to renew
technology, but as most of them are small and medium sized with
serious lack of capital, technological innovation of enterprises is faced
with many difficulties.
As for renewing production, according to the assessment of
SIDEC (2017), Vietnam’s SI enterprises have been active in applying
modern management criteria and tools in their production activities.
However, most Vietnam-invested SI enterprises are facing difficulties
in renewing their organization, organizing, re-arranging production due
to problems in human resource quality and capital sources.
As for attracting investment capital: FDI capital mostly focuses
on assembly area while investment capital (both domestic and foreign)

on production area of supporting industry remains low.
As for the linkage between electronic SI enterprises and
customers and suppliers: Generally, the linkages in industrial zones
and clusters and between enterprises are limited.
3.3. Impacts of the development of supporting industry for
electronic sector to Vietnam’s economic growth
3.3.1. Analyzing the impacts of supporting industry development on
Vietnam’s economic growth using input-output method
3.3.1.1. Description of the applied method and data
Applying the meaning of Leontief matrix, the PhD learner
investigates the impacts of SI on the production of other industries in
the economy and impacts on total production values, added values,
linkages of the economy.
About the data: the learner uses non-competitive I/O table of
Vietnam in 3 periods of 2007, 2012, 2016.
3.3.1.2. Results and evaluation


18
Analyzing the impacts via closed I-O model
Impacts of SI on production values and added values: The trend
is SI production makes production values increase, added values
decrease (the coefficient of impacts of supporting industry on added
values decreases from 0.53 to 0.38 and 0.41).
As for linkage impacts: the coefficient of backward linkages of
SI is quite low (<=1), indicating that the role of SI as demand is small.
The coefficient of forward linkages of SI is quite high, increasing from
1.55 to 1.72 and 1.86, reflecting its supply roles.
As for impacts on imports, the coefficients of spillover to
imports of SIs in three periods are relatively high, higher than 1 and

decrease slightly in the 2016 – 2020 period.
Analyzing the impacts via open I-O model
Results indicate that the roles of SI in incomes are quite low
compared with other industries in the economy.
3.3.2. Analyzing the impacts of supporting industry development on
Vietnam’s economic growth using Cobb-Douglas production function
3.3.2.1. Building model and data sources
Data source:
The dissertation uses data from the enterprise survey conducted
by General Office of Statistics (VES) in the 2006 – 2015 period to run
provincial regression model; uses VES data in the 2012 – 2015 period
to run regression model with dependent variables at enterprise level.
The equation to evaluate the impacts of supporting industry
on the development of electronic industry has the following form:
Equation 1:

log( tinh _ doanhthu _ dientu it )  log( A)   log( tinh _ von _ dientu

it

  log( tinh _ laodong _ dientu it )   log( tinh _ doanhthu _ lkdientu

)
it

)

 log( tinh _ doanhthu _ ptkhac )   log( PCI it )   log( daotaold it )  eit
it

19

Equation 2:
log( doanhthu _ dientu it )  log( A)   log( laodong _ dientu it )   log( von _ dientu it )
  log( dtlkdt _ tinh it )   log( doanhthu _ ptkhac _ tinhit )   log( GDP _ tinh ) 

PCI it  daotaold it  qmdn _ ld i  XNK i  n hom dni  eit

3.3.2.2. Impact results
(i) Regression model with dependent variable as revenue of
electronic sector at provincial level
Results indicate that revenue of the electronic sector depends
largely on capital, laborers of the sector and revenue of the componentsproducing industry. All regression coefficients have high significance
(over 95%) and have positive value. At (mh4), the regression coefficient
χ = 0,08879545, meaning that when other factors remain constant, an
increase of 1% in the revenue of the components-producing industry of
the province in the previous year will result in an increase of 0.089% in
the revenue of the electronic sector of the province in the following
year. This affirms the positive effects of the components-producing
industry on the revenue of Vietnam’s electronic sector.
(ii) Regression model with dependent variable as revenue of
electronic sector at enterprise level
The calculation results in all 4 models show that the revenue of
the components-producing industry and revenue of some other
supporting industries have impacts on the revenue of the entire
electronic sector. At (mh4), the regression coefficient χ=0,25290833,
indicating that when other factors remain constant, an increase of 1% in
the revenue of the components-producing industry of the province will
result in an increase of nearly 0.253% in the revenue of the electronic

sector.


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3.4. Affecting factors to the promotion of economic growth of
electronic supporting industry development in Vietnam
3.4.1. Market volume
This is the necessary condition for the development of
Vietnam’s electronic sector. Besides, taking imports – exports of
electronic products and components into account, it can be seen that this
is the sector with high import-export growth rate, indicating that there
are lots of market opportunities for Vietnam’s electronic sector.
3.4.2. High-quality industrial human resources
It can be generally assessed that Vietnam’s labor force still has
low quality, the number of untrained workers accounts for a high
proportion. Another difficulty facing processing – manufacturing
industry is the slow increase in labor productivity. These have caused a
lot of obstacles for electronic enterprises to access and renovate
technology, thereby badly affecting the development of the ES as well
as the increase of productivity of the entire economy.
3.4.3. Infrastructure
Vietnam has established the infrastructure consisting of
industrial zones and supporting industrial zones to create favorable
conditions for the development of processing – manufacturing industry
in general and electronics in particular. However, limitations in
planning, administration and investment attractions in industrial zones
have made the linkages between enterprises in the zones scattered,
thereby cannot create positive impacts on the relations between SI
development and EG.
3.4.4. Policies to develop supporting industry for electronics

Vietnam has made specific policies to develop SI. In 2015, the
Government issued Decree No. 111 on Developing Supporting
Industry so as to stipulate incentive and preferential policies to


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supporting industry development. However, the process of building up
and implementing policies has revealed lots of inadequacies.
3.4.5. Information system
At present, the information system of market, trade and
investment promotion, producers and suppliers of supporting industry
products is mainly provided by Ministry of Industry and Trade,
Associations and Centres for Business Supports. However, due to slow
implementation, modest care from most supporting industry enterprises,
loose connection with electronic supporting industry, the positive
impacts that the system brings about remains low.
3.4.6. The nation's advantage in the Electronic Industry Value Chain
Vietnam is considered one of the countries with advantages of
abundant labor force and low wages; In addition, the ES has advantages
in terms of market size; Therefore, it attracted a large number of FDI
enterprises investing in the field of EI. However, production activities
are mainly through assembly activities, which depend heavily on
imported, underdeveloped SIs, which have made the country's
advantage not have a positive impact on Vietnam's EG. .
3.4.7. Factors related to competitiveness, business management and
others
From FDI enterprise engaged in SI production to provide for
Samsung, the interview results show that there are three main
difficulties in production activities of enterprises: production costs are
high due to dependence on imported materials; market volume is not

big enough; the quality of laborers is low (8/11 responses mention these
problems). Other difficulties mentioned are the lack of linkages between
enterprises and suppliers; difficulties in administrative procedures;
difficulties caused by the lack of capital and technology (4/11 responses
mention).


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For Vietnam enterprises, the main difficulties in production are
capital, human resources and technology. In addition, lack of linkages
between enterprises, lack of market and customer information are major
reasons why enterprises can hardly develop.
CHAPTER 4. SOME SOLUTIONS TO DEVELOP SUPPORTING
INDUSTRY FOR ELECTRONICS TO PROMOTE VIETNAM’S
ECONOMIC GROWTH
4.1. Context related to the goals of developing supporting industry
for electronics so as to promote Vietnam’s economic growth
In recent time, there have emerged two tendencies which affect
the production and business of electronic sector in particular and
Vietnam’s economy in general: they are the increasingly deep
international integration and Industrial Revolution 4.0. These tendencies
can bring lots of opportunities and also challenges to the development
of supporting industries and electronics of Vietnam.
4.2. Some solutions to develop supporting industry for electronics to
promote Vietnam’s economic growth
Solutions to deal with restrictions in the development process
of electronic SIs and raise competitiveness, business management of
SI enterprises include: firstly, identifying scope of SI that should be
prioritized; secondly, working out measures to attract investment,
especially foreign direct investment to develop SIs; thirdly, actively

renovating technology, renewing production; fourthly, promoting
linkages.
Solutions to promote factors with positive impacts to the
promotion of EG of electronic SI development include: fostering the
demand for SI products; developing and improving the quality of
human resources for SI; strengthening the implementation of policies to


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develop SI; exploit better the national advantages to participate more
effectively in the value chain of electronic industry .

CONCLUSION
New contributions of the dissertation
In theories, the dissertation has two main contributions: (1)
Building up and completing theoretical frames on the roles of electronic
SI in EG, including: Raising the productivity and effectiveness of the
economy; Attracting and driving investment flows; Promoting exports;
Fostering spillover effects and linkages; Impacting on imports;
Enhancing the competitiveness and added values for the main electronic
industry and the entire economy. (2) Proposing methods to evaluate the
effects and impacts of electronic SI on EG by combining 2 quantitative
methods: Input-output table model (I-O) and regression model based on
open Cobb-Douglas production function.
In reality, the dissertation has made the following dicoveries in
the case of Vietnam: (1) Overviewing the situation of SI for Vietnam’s
ES; (2) Evaluating the impacts of the development of electronic SI on
Vietnam’s EG; (3) Identifying affecting factors to the promotion of
Vietnam’s EG of electronic SI development; From those, point out the
causes leading to limitations in the impact of electronic SI on the EG;

(4) Suggesting solutions to promote the positive impacts of electronic
SI development on Vietnam’s EG in the coming years.
Proposals for further research
Some limitations of the thesis::
Firstly, in analyzing the situation, the separation of data reflecting
the development of each SI product for electronics is difficult.