A paradox of Vietnam's economic performance in the 1990s has been that despite rapid economic growth, extensive economic reforms, increased openness and significant reductions in poverty, the rate of employment growth has been disappointing. Conventional explanations of the slow growth of employment emphasize the incomplete nature of the economic reform process emphasizing three key areas - trade policy, the role of state-owned enterprises and labour market policies - which have led to resources being misallocated to the detriment of labour-intensive export sectors and the private sector. The paper shows that the slow growth of industrial employment in Vietnam has not been a result of an excessive concentration of resources on capital-intensive industries or state-owned enterprises. It is primarily the changes which have occurred within industries, resulting in increases in labour productivity from the very low levels at the beginning of the 1990s, that have prevented industry from absorbing more workers.
Journal of the Asia Pacific Economy (2004) 9 (2) 191-208 [DOI: 10.1080/1354786042000207335]