ECONOMIC GROWTH CONSTRAINTS IN VIETNAM: A STUDY USING THE GROWTH DIAGNOSTIC APPROACH

Nguyen Duc Thanh and Pham Van Dai

Vietnam Institute for Economic and Policy Research, Hanoi, Vietnam

Recent studies have clearly pointed out a decreasing trend of Vietnam’s economic growth in the short and the medium terms. This paper presents a study applying the growth diagnostic method for Vietnam to determine growth constrains. The binding growth constrains of Vietnam are found to include a poor business environment; an underdeveloped infrastructure, especially the transportation network market; failures related to information externalities, learning externalities and coordination failures. Notably, the energy infrastructure could be a vital constraint in a near future, but is not a binding constraint at present. The inefficiency of financial intermediaries and the government’s over-investment could become a binding constraint when the economy returns to its high growth path.

Keywords: Vietnam, economic growth, growth diagnostic, growth policy

JEL Classification: O40, O43,O11, O12

Economic Horizons, 2016, Vol. 18, No 1, pp. 35-53; Published online 25 April 2016;  doi:10.5937/ekonhor1601033T
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