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Hahà ộ VIETNAM ACADEMY OF SOCIAL SCIENCES GRADUATE ACADEMY OF SOCIAL SCIENCES NGUYEN THI DONG RESEARCHING THE IMPACT OF ECONOMIC SECTORAL RESTRUCTURING ON EMPLOYMENT IN THE PROCESS OF

Hahà ộ

VIETNAM ACADEMY OF SOCIAL SCIENCES

GRADUATE ACADEMY OF SOCIAL SCIENCES

NGUYEN THI DONG

RESEARCHING THE IMPACT OF ECONOMIC SECTORAL RESTRUCTURING ON EMPLOYMENT

IN THE PROCESS OF ECONOMIC GROWTH IN

The thesis is completed at:

GRADUATE ACADEMY OF SOCIAL SCIENCES

VIETNAM ACADEMY OF SOCIAL SCIENCES

Supervisors:

1 Assos Prof Dr Nguyen Quoc Te

2 Assos Prof Dr Nguyen Van Luan

Referee 1: Assos Prof Dr Nguyen Chien Thang

Referee 2: Assos Prof Dr Nguyen Thi Nguyet

Referee 3: Assos Prof Dr Ngo Tuan Nghia

The dissertation will be examined by Examination Board of Academy, at: Graduate Academy of Social Sciences

The thesis can be found at: - Graduate Academy of Social Sciences’ Library

- National Library

INTRODUCTION

1 Necessity of the research

After a serious domestic socio-economic crisis in the 1980s, Vietnam decided to comprehensively innovate economic thinking The main content of innovation is to abandon the planned economic mechanism and move to the market mechanism with state management Only less than 10 years after “Doi Moi”, Vietnam has made a strong transition, from being an embargoed and surrounded country, it has become one of the world's top food exporters Taking advantage of this development, in 2001, the Ninth Congress of the Vietnamese Communist Party set the goal that Vietnam will basically become a modern industrialized country by 2020 However, 15 years later, at the

11th session of the 13th National Assembly, the National Assembly’s resolution admitted that the plan had failed

Vietnam’s failure to achieve the goal of becoming a modern industrial country by 2020 is due to various reasons One of the reasons that can be mentioned is that the selection of growth model in Vietnam

in this period is not clear Although Vietnam set a target to become an industrialized country by 2020, Vietnam did not provide specific orientations to implement it thouroughly The most important goal that Vietnamese economy targets in each year and every five-year plan is stil GDP growth – an index that is not much related to the speed of industrialization of the country There seems to be satisfaction with high growth in the past but there is no good preparation for dealing with difficulties, which has made Vietnam fall into a “middle income trap” Reality shows that while digital resources are growing rapidly, Vietnam

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is still trying to rely on natural resources to boost the economy Therefore, after 30 years of “Doi Moi”, Vietnam’s economic sectoral structure has shifted towards reducing the rate of agriculture, increase the rate of industry, but this change is still slow, in which the number of unskilled jobs is very high

How does Vietnam get closer to the goal of becoming a modern industrialized country? Perhaps the first thing Vietnam should do is to aim for a new growth model: growth based on labor productivity, associated with creating more high quality jobs on the whole society There are many factors affecting employment and labor productivity growth However, depending on the different stages of development of the economy, one or several factors will become the key factor In the current period, economic structural change can be considered a leverage element that stimulates employment growth Accordingly, when economic structure is shifted reasonably, similar to the development of the world economy, labor productivity achieved in each economic sector will be increased, jobs will be transformed and increased both in quanlity and quantity Moreover, the trend of deep globalization and revolution of technology 4.0 with versions 4.1 and 4.2 is changing the way of structural transformation of any economy in the connection with global value chains In the coming time, the industry structure will be more closely linked with the technological structure, meanwhile, digital conversion is always considered as a direct influence on the labor force, but its effect has never been quantified Therefore, the relationship between economic sectoral structural transformation and employment is considered a complex relationship, but this may be the key to helping the

economy achieve its goal of becoming an industrial country in the

shortest possible time, so the author has chosen the topic “Researching

the impact of economic sectoral restructuring on employment in the process of economic growth in Vietnam” as the research content for the

doctoral dissertation in development economic

2 Objectives and research tasks of the thesis

The basic objective of the thesis is to research the impact of economic sectoral restructuring on employment On that basis, the thesis proposes scientific-based solutions to promote restructuring process towards creating more quality jobs in Vietnam

- Thirdly, after implementing the Granger test, the expected result is one-way causality, the thesis will continue to use quantitative methods to evaluate the contribution of economic sectoral restructuring to employment in Vietnam in two aspects: the number of jobs and labor productivity;

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- Fourthly, propose some solutions and policy suggestions to stimulate restructuring process in Vietnam towards creating more and more effective jobs for society

3 Object and scope of research

3.1 Research object

The research object of the thesis is to study the relationship between economic sectoral restructuring and employment

3.2 Research scope

In terms of space: the thesis studies this relationship in the whole

territory of Vietnam In particular, employment is analyzed in two aspects: labor productivity and number of jobs in the economy; the economic structure is divided into 3 regions and 17 sectors

In terms of time: the thesis focuses on analyzing the situation of

Vietnam’s economy in the period of 1991 – 2017 and comparing it with some other countries in the period that has the same development level as Vietnam

In terms of content: the thesis focuses on analyzing the relationship

between employment and economic restructuring by sectors as it is considered a “pillar” structure It reflects the level of science and technology development, production force development and social labor division Moreover, the economic structure by region and by composition

in each country is very different Data collection for these two types of structures is also not reflected in international statistics, so it is difficult

in quantitative research as well as comparing the level of transfer between Vietnam and other countries

4 Methodology and research methods

The thesis uses the following research methods: dialectical method; abstracting science method; descriptive statistics method; comparative method and econometric method

For the econometric method, the dissertation uses three specific methods: (1) Granger causality test is used to measure the relationship between economic sectoral restructuring and employment; (2) Vector method and elasticity coefficient are used to consider the impact of economic sectoral structuring on the number of jobs in the economy; (3) Shift-share analysis method (SSA) is to used to evaluate the impact of economic sectoral structuring on social labor productivity

5 New scientific contribution of the thesis

The thesis has made new scientific contributrions, as follows:

- An overview of the rationale for the relationship between economic sectoral structural transformation and employment in the economy;

- Through a number of quantitative methods, the thesis assesses the contribution level of economic sectoral restructuring to employment

in Vietnam in terms of both quality and quantity;

- The thesis shows the positive impacts, negative impacts and cause of negative impactd of economic sectoral restructuring on employment Since then, there are policy suggestions to promote the process of economic sectoral restructuring in Vietnam towards creating more and more effective jobs for society

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6 Theoretical and practical meaning

In terms of theory, the thesis selects three mathematical methods to find out the relationship between economic sectoral restructuring and employment This finding will contribiute a part of valuable theory to improve the analytical framework of economic sectoral restructuring and employment in Vietnam Therefore, this will be a solid scientific baisc for further analysis of relationship between these two factors

In terms of practicality, based on reliable and up-to-date data, the thesis will analyze employment status in the process of economic sectoral restructuring in Vietnam, which may be useful for state government in designing and implementing policies related to economic sectoral restructuring and employment

7 Structure of the dissertation

In addition to foreword and conclusion, the dissertation includes three chapters:

Chapter 1: Overview of research

Chapter 2: Theoretical background and models to assess the impact

of economic sectoral restructuring on employment;

Chapter 3: Assessing the situation and analyzing the impact of economic sectoral restructuring on employment through quantitative methods;

Chapter 4: Orientation and solutions to promote the economic sectoral restructuring that have a positive impact on employment in Vietnam

CHAPTER 1 OVERVIEW OF RESEARCH

1.1 Overview of researchs in the world

The consideration of the relationship between economic sectoral restructuring and employment has been long long established in may studies around the world They all have a common view that the more economic sectoral restructuring is developed in the modern way, the more jobs will be created The dissertation analyzes the overview according to two contents: theoretical studies and empirical studies There have been quite a number of classic theories studying this relationship, such as Fisher’s labor productivity law (1935); two-area theory of economists: Ricardo (1871); Lewis (1954), Jorgenson (1961), Oshima (1989); Harris - Todaro's labor migration theory (1970); Lin’s new structural economic theory (2010)

In addition to theoretical studies, the relationship between economic sectoral restructuring and employment is also analyzed in practice through studies of Ark B V (1995), Fagerberg J (2000), Timmer M & Szirmai A (2000), Nazamuddin (1996), Teal (2011)

1.2 Overview of researchs in Vietnam

In Vietnam, studies related to economic sectoral restructuring and employment are expressed through research topics at the state level, ministry level; independent studies of group; specialized studies of international organizations; doctoral dissertations; monographs and independent scientific articles

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CHAPTER 2 THEORETICAL BACKGROUND AND MODELS TO ASSESS THE IMPACT OF ECONOMIC SECTORAL RESTRUCTURING

ON EMPLOYMENT

2.1 General theory of economic sectoral restructuring and

employment

Economic sectoral structure, interms of quantity, is determined by the rate of output (or GDP) of each part of the total output value (or GDP) of the entire economy

Economic sectoral structure, interms of quality, is the whole of componants that make of economy of each country that are inextricably linked These parts interact with each other, represent the quantity and quality correlation in certain space and time and they are suitable for certain socio-economic conditions

The economic restructuring is the process of changing the sectoral structure from one state to another in the direction of becoming more and more perfect, suitable for the environment and development conditions

From an economic perspective, employment is concept used to indicate the appropriateness of labor and necessary conditions (capital, production materials, technology and other social factors) to use labor

restructuring and employment in the process of economic growth

Economic sectoral structural transformation creates the premise for the for the growth and improvement of production factor markets, such

as labor market and financial market In contrast, perfecting those markets promotes economic growth and thus deepens the process of restructuring However, industry restructuring is a process, not a new structure is formed at once and immediately replace the old structure, but the process of economic restructuring must be the process of accumulation of quantity, changes in quantity to a certain extent lead to qualitative changes From the qualitative change, the new sectoral structure can affect labor – employment, increate labor productivity and boost economic growth

2.2 An overview of theoretical models that relate to the

relationship between economic sectoral restructuring and employment

sectoral restructuring and employment and building an analytical framework for the dissertation

From theoretical studies, the thesis has examined the following factors as the main reasons for the rapid shift of economic structure and become the driving force of economic growth and job creation in the period of national industrialization and modernization: (1) Institutions and policies of the state; (2) Capital and progress of science and technology; (3) Qualifications and capacity of employees; (4) Other factors: natural conditions, population structure, international integration

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PROPOSED ANALYTICAL FRAMEWORK FOR THE THESIS

THEORETICAL BACKGROUND OF ECONOMIC RESTRUCTURING AND EMPLOYMENT

Factors affecting restructuring and employment

Lessons of experience about restructuring and employment

QUANTATIVE

SITUATION OF RESTRUCTURING AND EMPLOYMENT Granger

Causality

Test

Vector method and Elasticity Coefficient

Shift-share Analysis method

EVALUATION OF THE RESULTS

Evaluating the impact of restructuring

on labor productivity

POLICY SUGGESTION

Group of solutions for

government policies

Group of solutions for business

Group of solutions for jobs and labor productivity

2.3 Methodological background of models analyzing the

relationship between economic sectoral restructuring and employment

Calling MLI as an economic restructuring variable and GL is a job growth variable, the causality test between two variables will be conducted based on the following panel data model:

∑

∑

The verification process will follow the steps:

The vector method is caculated according to the formula:

Combining the shifting rate of economic structure and labor structure

by sector to assess th impact of economic restructuring on employment for workers through the following elasticity:

Assuming the economy is divided into i sectors (i = 1, ,n) Calling

PA is social labor productivity, measured by the total output value (YA)

on the total number of employees (LA), so PA = YA/LA Similarly, labor productivity of industry i, Pi: so Pi = Yi/Li Calling LA is the total number

of employees working and Li is the number of employees working in industry, then the proportion of working employees in industry i will be

Si, Si = Li/LA We have the formula:

L Y Y

in labor productivity and the speed of labor productivity growth; The third is “endogenous effect”, reflecting improved labor productivity in the absence of labor restructuring and the size of working employees in each sector in the economy is constant during the study period

2.4 Experience in implementing economic and employment

restructuring in a nuber of countries and regions

Dissertation analyses Japan, South Korea and Thailand to draw lessons for Vietnam because these countries have the same characteristics as Vietnam, whose developmetn is more or less dependent