The involvement in global value chains and its policy implication in Vietnam

This article examines the involvement pattern in global value chains (GVCs) with its policy implication in Vietnam, in comparison with those of the other Asian countries, by using the OECD value-added-trade data. The study first identified the “smile curve” as the average pattern of the Asian GVCs development paths in total manufactures, in which the domestic value share to exports declines at the early development stage and regains itself at the later stage with the turning point being at 2,015 US dollars as per capita GDP. The study then found that the Vietnamese economy stood at the critical position in its GVCs development path, such that the Vietnamese current per capita GDP is very close to 2,015 US dollars, the Asian average turning point in total manufactures. The sectoral analysis in Vietnam also implied that sophisticated manufacturing sectors needs to be transformed from only assembling activities toward developing domestic capacities to produce parts and components. The Government policies in Vietnam thus matter to nurture local productive capacities, and the “enterprise clustering” and “linkages development” should be the key strategies to facilitate technological transfers from international firms to local ones in line with the GVCs involvement.