Work

From fields to factories: Special economic zones, foreign direct investment, and labour markets in Vietnam

Year: 2025

Type: article

Abstract: Vietnam's deep integration into GVCs has been driven by the establishment of special economic zones (SEZs). This paper examines the local labour market impacts of this SEZ programme. We trace the built-up area of SEZs over time to construct a novel continuous measure of SEZ exposure using historical satellite imagery. In a difference-in-differences design with continuous treatment, we examine the impact of SEZ exposure on local labour market outcomes at the district-level for the period 2009–2019. We find that the expansion of SEZs has led to a rapid shift in employment from own-account and family work in agriculture to manufacturing in foreign firms. We also show that SEZ exposure leads to higher wages and more formal employment contracts. Earnings improvements are not confined to workers in foreign manufacturing firms, but spill over to workers in household businesses and domestic firms. The effects on women account for most of these impacts.

Source: Journal of Development Economics

DOI: 10.1016/j.jdeveco.2025.103467

Authors: Tevin Tafese, Jann Lay, Van Tran

Institutions: German Institute for Global and Area Studies, University of Göttingen, Ho Chi Minh University of Banking

Language: English

Topic: Economic Zones and Regional Development

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

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

Open Access status: hybrid

Estimated APC paid: $4,590