Work

Capital market distortions and skills demand in a transitional economy: The case of Vietnam

Year: 2024

Type: article

Abstract: We model and investigate differences in factor demand by private and state‐owned enterprises in Vietnam, an economy in transition, to market‐driven growth. We postulate that state firms, who have privileged access to financial capital and face lower borrowing costs, choose technologies that are capital intensive and demand more skilled labour, a complementary input, while private firms rely on low‐technology methods and less‐skilled labour. Propositions generated by the model are supported by analysis using data from Vietnam's enterprise census. Because the private sector is by far the larger employer, a more level capital market playing field would likely raise aggregate demand for skills, thereby strengthening incentives to invest in higher education.

Source: Economics of Transition and Institutional Change

DOI: 10.1111/ecot.12444

Authors: Diep Phan, Ian Coxhead

Institutions: Beloit College, Japan External Trade Organization

Language: English

Topic: Post-Communist Economic and Political Transition

Subfield: Political Science and International Relations

Field: Social Sciences

Domain: Social Sciences

SDGs: Decent work and economic growth, Industry, innovation and infrastructure

Open Access status: hybrid

Estimated APC paid: $2,870