World Bank
Vietnam at a crossroads: engaging in the next generation of global value chains
Vietnam is a lower-middle–income country and, like many of its peers, faces the challenge of upgrading to higher value-added tasks in global value chains (GVCs). Participation and upgrading are not an arbitrary policy objective: both may be of decisive importance for Vietnam’s future economic development path. While the economy currently is highly competitive in relatively low-skilled, labor-intensive tasks, history has shown that wages eventually will rise and this comparative advantage will erode. In order to avoid the middle-income trap—where a country can compete neither in low value-added stages due to rising labor costs nor in higher value-added stages due to a lack of adequate skills and technologies—the Vietnamese government has embarked on a path toward deeper integration with the world economy. While other middle-income countries hesitate, Vietnam is signing deep preferential trade agreements (PTAs) with economic heavyweights such as the EU, the United States, and Japan. However, committing to the comprehensive rulebooks of today’s PTAs is not a guarantee for good GVC performance and requires accompanying policy initiatives at the domestic level.
Full publication is available on: DOI https://openknowledge.worldbank.org/bitstream/handle/10986/26215/9781464809965.pdf?sequence=2&isAllowed=y
Contributors from our Network
Axel Berger
German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)
Dr. Axel Berger is a Senior Researcher at the German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE), Programme Transformation of Economic and Social Systems. He is heading the G20 Policy Research Group at DIE and led the T20 Task Force on Trade, Investment and Tax in 2017, 2018 and 2019. Axel holds a doctorate in political science from the University of Duisburg-Essen and a Master’s degree from the Munich Ludwig-Maximilians-University in political science, economics and modern history. He works on the design, effects and diffusion patterns of international trade and investment agreements, with a focus on emerging markets and developing countries. Other areas of current research include the effects of an international investment facilitation framework, the impact of free trade agreements on upgrading within global value chains and the role of the G20 in global governance. He teaches international political economy at the University of Bonn and regularly advises developing countries, development agencies and international organisations on trade and investment matters.
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