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Developing Supporting Industries: A Path to Economic Growth in Vietnam

This paper, part of my master's thesis at Tufts University's Fletcher School, explores the concept of Supporting Industries (SI) and their crucial role in Vietnam's economic growth. It defines SI as industries that provide essential manufactured inputs, highlights the need for SI development to enhance Foreign Direct Investment (FDI), and identifies challenges like limited demand and information gaps. Strategies such as horizontal and vertical business expansion, technology upgrading, and collaborative training programs with multinational corporations (MNCs) are proposed for effective SI development, drawing lessons from successful models in Malaysia.

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Developing Supporting Industries: A Path to Economic Growth in Vietnam

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  1. This paper was written as my master thesis at the Fletcher School, Tufts University. It discusses: (i) the definition of supporting industries (SI), (ii) economic growth through development of SI, and (iii) means to develop SI. <Main Points> SI is defined as a group of industries to supply “manufactured” inputs, such as production parts and molding tools. The development of SI is necessary for amplifying FDI’s positive externalities. However, limited demand size and information gaps impede the development of SI in Vietnam. The problem of limited demand size can be overcome by either “horizontal” or “vertical” business expansion. Technology upgrading is needed. The establishment of a collaborative training program between MNCs and domestic SI is highly recommended to reduce information gaps. Learning from the Penang Skill Development Center in Malaysia, high-level industrial agglomeration of open-modular products is a key to attract MNCs to a collaborative training program. Development of Supporting Industries for Vietnam’s IndustrializationJunichi Mori (GRIPS/VDF Tokyo Researcher)e-mail: jmori@grips.ac.jp What is “Supporting Industries” The Position of Vietnam

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