Economic structural transformation and equity in Vietnam: Lessons from Post-War Japan

Abstract

Duality in economic structure is an enduring characteristic of many developing and emerging economies, and even when economies industrialize, structural and regional imbalance remains a challenging problem in economic development. Japan however managed to solve the problem of duality in its economic structure in the post-war period. This research analyses the Japanese economic transformation experience and draws lessons for Vietnam, which even though has made great strides in reducing poverty, still faces the challenge of economic structural duality and regional imbalance characterized by poverty. The main finding is that raising productivity uniformly across sectors and regions was central to Japanese structural economic transformation, and that such productivity rise can be facilitated by uniform infrastructure development and judicious governmental policies directly impacting the right combinations of factors of production, namely increase in capital and technology in all productive sectors. The lessons drawn for Vietnam are judicious governmental policies providing incentives for increasing technology and capital investments even in rural areas. In addition, governmental policies positively impacting agricultural commodity prices, infrastructure development, and land reforms are recommended for Vietnam. Keywords: Economic Duality, Economic Structural Transformation, Equity, Japanese and Vietnamese Economic Developmen