National economic structure is defined as the composition and patterns of various components of the national economy such as: production, value added, consumption, gross capital formation, export, import and gross value added. Structural change is conceptualized as the change in relative importance of the aggregate indicators of the economy. It implies that changes of intra-sectoral and inter-sectoral lead to changes in final demand, output, value added and import. This paper seeks to answer some questions: 1) What would be the impact on the power of dispersion and the sensitivity of dispersion by sectors? 2) What would be the impact on value added induced by final demand ? and 3) How would the final demand impact the level of import ? The main finding in this study is to find a sectoral structure and a factor of the final demand for Vietnam’s development.
In Vietnam, it has been politically directed and generally accepted that the structure of economy should be adjusted toward larger proportions of industry and construction sector (Sector II) and service sector (Sector III) in GDP and this has long been considered as the holistic solution to boost economic development [
The economic structure was proposed by W. Leontief [
In Vietnam, there are some studies that apply the input-output model to analyze and measure economic structure such as T. Bui, K. Kobayashi [
This paper uses the Vietnam input-output tables of 2012 and 2016. The 2012 input-output table was published by Vietnam General Statistics Office [
・ Determine the new gross output (X2016) based on the enterprise survey;
・ Determine the vector of intermediary input (II2016) based on the enterprise survey;
・ Intermediate input matrix:
X i j 2016 = ( X i j 2012 / I I j 2012 ) ∗ I I j 2016
In this method: A 2016 ≠ A 2012
where: A = ( a i j = X i j / X j ) ( n × n ) with n is number of sectors in the input-output table;
・ The final consumption is estimated based on the Household Living Standard Survey, investment, import and export of goods and services data collected from Vietnam General Statistics Office [
・ The input-output table 2016 was adjusted to 2012 price;
・ After that, RAS method was used to balance the input-output table 2016;
・ In order to be compatible with the input-output tables of some Asian countries and available data for updating input-output table 2016, the research team selected 19 sectors (
N. | Sectors |
---|---|
1 | Agriculture, forestry and fisheries |
2 | Extractive |
3 | Production of food, beverages and cigarettes |
4 | Production of textile products, apparels and leather goods |
5 | Production of petroleum products and gas |
6 | Production of chemical products |
7 | Production of non-metallic mineral products |
8 | Manufacturing and processing metals and metal products |
9 | Manufacturing equipment and machinery |
11 | Other manufacturing industries |
11 | Production and distribution of electricity, gas, hot water, steam and air conditioning |
12 | Water supply; Waste and waste water management and treatment |
13 | Construction |
14 | Transportation of warehouses |
15 | Trading, retail; hotel and restaurant |
16 | Information and communication |
17 | Financial, banking and insurance operations |
18 | Professional, scientific and technological activities |
19 | Other service industries |
Source: Selected by authors.
The input-output tables of Vietnam were compiled with competitive-import type, this means the intermediate input matrix, final consumption, gross capital formation and export cover both domestic products and import products. In order to better understand the economic structure, the input-output tables with competitive-import type should convert to non-competitive-import type. The way for moving is as below:
Leontief standard equation at competitive-import type::
A ⋅ X + Y = X (1)
where X is the gross output matrix, A = ( a i j ) ( n × n ) is the direct intermediate input coefficient matrix with a i j = X i j / X j , Y is the domestic final demand matrix and n is the number of sectors.
Y = C + G + I + E − M (2)
where: C is final consumption of household, G is Government consumption. I is gross capital formation, E is export and M is import. Decompose matrix A and Y for domestic (Ad, Yd) and imported products (Am, Ym), Equation (1) can be rewritten:
A d ⋅ X + A m ⋅ X + C d + C m + G d + G m + I d + I m + E = X (3)
Call C d + G d + I d + E = Y d
And notice that A m ⋅ X + C m + G m + I m = M
From Equations (1)-(3) we have:
A d ⋅ X + Y d = X (4)
And the Leontief equation to the non-competitive input-output model is:
X = ( I − A d ) − 1 ⋅ Y d (5)
Ad is the matrix of the direct domestic intermediate input ratio, ( I − A d ) − 1 is the inverse Leontief matrix and Yd is the domestic final demand matrix (including final consumption of domestic products, accumulation of domestic products and exports).
Put: B = ( I − A d ) − 1 .
The backward linkage (BL) and forward linkage (FL) are defined as follows:
Backward linkage:
B j = ∑ i n B i j ; Refers to the expansion of an industry when using other industry products as inputs.
Forward linkage:
B i = ∑ j n B i j indicates the level of production depending on input from other sectors.
Guo and Hewings [
Accordingly, the power of dispersion index and the sensitivity for dispersion of each sector are determined as below:
Power of dispersion index:
P j = B j ⋅ ( N / T ) (6)
Sensitivity for dispersion index:
S i = B i ⋅ ( N / T ) (7)
Here T = ∑ ∑ B i j .
The combination of sensitivity and dispersion of each sector indicates the relative importance of that sector to the economy. This combination is defined as the “multiplier product matrix” of the Leontief system:
M = S ⋅ P (8)
With: S = ( S i ) ( n × 1 ) and P = ( P j ) ( 1 × n ) and M = ( M i j ) ( n × n ) are considered as “Economic-Landscape” at a given time and indicate the inter-sectoral structure at that time.
The effect of demand on output X and value added is calculated as follows:
Impact of final domestic demand on output X: Σ ( I − A d ) − 1 ⋅ Y d ÷ Σ Y d
Impact of final domestic demand on value added Σ v ⋅ ( I − A d ) − 1 ⋅ Y d ÷ Σ Y d
Here: ÷ shows scalar division
About power of dispersion index and sensitivity for dispersion index
The results of the research on power of dispersion index and sensitivity for dispersion index from
No. | Backward linkage (BL) | Power of dispersion | Forward linkage (FL) | Sensitivity of dispersion | Backward linkage (BL) | Power of dispersion | Forward linkage (FL) | Sensitivity of dispersion |
---|---|---|---|---|---|---|---|---|
1 | 1.688 | 1.104 | 2.299 | 1.504 | 2.181 | 1.109 | 3.18 | 1.616 |
2 | 1.396 | 0.913 | 2.219 | 1.452 | 1.761 | 0.895 | 2.7 | 1.373 |
3 | 2.263 | 1.48 | 1.657 | 1.084 | 2.769 | 1.408 | 2 | 1.017 |
4 | 1.551 | 1.014 | 1.364 | 0.892 | 1.968 | 1 | 1.658 | 0.843 |
5 | 1.749 | 1.144 | 1.923 | 1.258 | 2.207 | 1.122 | 2.994 | 1.522 |
6 | 1.558 | 1.019 | 1.461 | 0.955 | 2.128 | 1.082 | 2.164 | 1.1 |
7 | 1.582 | 1.035 | 1.304 | 0.853 | 2.153 | 1.094 | 1.693 | 0.861 |
8 | 1.464 | 0.957 | 1.752 | 1.146 | 1.935 | 0.983 | 2.764 | 1.405 |
9 | 1.377 | 0.901 | 1.294 | 0.846 | 1.747 | 0.888 | 1.977 | 1.005 |
10 | 1.778 | 1.163 | 2.489 | 1.628 | 2.252 | 1.145 | 3.521 | 1.79 |
11 | 1.183 | 0.774 | 1.337 | 0.874 | 1.505 | 0.765 | 1.563 | 0.795 |
12 | 1.385 | 0.906 | 1.106 | 0.724 | 1.819 | 0.925 | 1.167 | 0.593 |
13 | 1.697 | 1.11 | 1.153 | 0.754 | 2.11 | 1.073 | 1.229 | 0.625 |
14 | 1.603 | 1.048 | 1.442 | 0.943 | 2.068 | 1.051 | 1.731 | 0.88 |
15 | 1.466 | 0.959 | 1.722 | 1.126 | 1.905 | 0.968 | 2.23 | 1.134 |
16 | 1.538 | 1.006 | 1.42 | 0.929 | 1.908 | 0.97 | 1.654 | 0.841 |
17 | 1.363 | 0.892 | 1.546 | 1.011 | 1.775 | 0.903 | 1.917 | 0.974 |
18 | 1.355 | 0.886 | 1.229 | 0.804 | 1.819 | 0.925 | 1.515 | 0.77 |
19 | 1.271 | 0.831 | 1.353 | 0.885 | 1.679 | 0.854 | 1.597 | 0.812 |
Source: Calculated by authors based on Vietnam input-output tables, 2012 and 2016.
The combination of sensitivity and power of dispersion provides us a picture of inter-sectoral linkages, given that the I/O table 2012 represents the economic structure of period 2008-2013 and I/O table 2016 represents the economic structure of period 2014-2018.
Value added and import induced by a unit increase in final demand
So far the paper has only discussed the dispersion power of demand to production. In many cases, the increase in demand stimulates not only the domestic production but also the import and therefore has very limited impact on value added. A sector is considered to be relative important to the economy if this sector has a relatively strong power of dispersion and high sensitivity index but has low dispersion to imports and high dispersion to value added. In this regard, the paper provides a deeper analysis in 4 sectors which have high dispersion power and sensitivity indexes.
It is also interestingly found that most service sectors have low power of dispersion and sensitivity index, but induce higher impact on value added and lower impact on import. This suggests that Vietnam should enhance capacity to produce input for service industries and likewise the services industries should be further developed to meet demand of other industries. By doing so, the improved dispersion power and sensitivity index would strengthen the inter-sectoral linkages, thus creating a strong impetus for country’s economic development.
2012 | 2016 | |||||
---|---|---|---|---|---|---|
STT | Value added induced by a unit increase of final demand | Power of dispersion on value added | Power of dispersion on import | Value added induced by a unit increase of final demand | Power of dispersion on value added | Power of dispersion on import |
1 | 0.684 | 1.024 | 0.952 | 0.640 | 1.050 | 0.922 |
2 | 0.654 | 0.979 | 1.042 | 0.585 | 0.960 | 1.062 |
3 | 0.625 | 0.935 | 1.130 | 0.580 | 0.953 | 1.074 |
4 | 0.560 | 0.838 | 1.327 | 0.511 | 0.839 | 1.251 |
5 | 0.483 | 0.722 | 1.560 | 0.431 | 0.707 | 1.456 |
6 | 0.511 | 0.765 | 1.474 | 0.493 | 0.809 | 1.297 |
7 | 0.663 | 0.992 | 1.016 | 0.619 | 1.016 | 0.975 |
8 | 0.431 | 0.645 | 1.716 | 0.413 | 0.678 | 1.502 |
9 | 0.388 | 0.581 | 1.845 | 0.375 | 0.615 | 1.600 |
10 | 0.538 | 0.806 | 1.392 | 0.514 | 0.844 | 1.243 |
11 | 0.879 | 1.316 | 0.364 | 0.763 | 1.253 | 0.606 |
12 | 0.772 | 1.154 | 0.689 | 0.690 | 1.133 | 0.793 |
13 | 0.578 | 0.864 | 1.274 | 0.538 | 0.883 | 1.183 |
14 | 0.604 | 0.904 | 1.193 | 0.555 | 0.911 | 1.138 |
15 | 0.798 | 1.195 | 0.608 | 0.724 | 1.189 | 0.706 |
16 | 0.682 | 1.020 | 0.959 | 0.608 | 0.998 | 1.003 |
17 | 0.869 | 1.300 | 0.396 | 0.798 | 1.309 | 0.517 |
18 | 0.822 | 1.230 | 0.536 | 0.714 | 1.171 | 0.733 |
19 | 0.886 | 1.325 | 0.345 | 0.799 | 1.311 | 0.515 |
Source: Calculation of authors based on Vietnam input-output tables, 2012 and 2016, note: 19 sectors consistency with
2012 | 2016 | |||||||
---|---|---|---|---|---|---|---|---|
Final consumption | Gross capital formation | Export of Goods | Export of services | Final consumption | Gross capital formation | Export of Goods | Export of services | |
Output | 1.744 | 1.799 | 1,788 | 1.601 | 2.053 | 2.128 | 2.094 | 1.911 |
Value added | 0.72 | 0.58 | 0.56 | 0.76 | 0.66 | 0.54 | 0.52 | 0.69 |
Import | 0.28 | 0.42 | 0.44 | 0.24 | 0.34 | 0.46 | 0.48 | 0.31 |
Source: Calculation of authors based on Vietnam input-output tables, 2012 and 2016.
strong dispersion to import. This again reaffirms the above finding that the country’s economy has strong characteristic of a “processing economy” and the slogan “Vietnamese use Vietnamese goods” no longer holds true.
The agro-forestry-fishery sector has good power of dispersion, sensitivity on production, the induced impact of final demand to value added. This sector needs capital and high-quality human resources as well as policy support to be able to develop sustainably.
The research results are similar to that of the research by Nguyen Hong Son in the study “2020 Vietnam Service: Towards Quality, Efficiency and Modernity” [
It’s necessary to take a flexible policy in dealing with the elements of the final demand. This study shows that currently, the export has no much dispersion on the value added. It just has the dispersion on the largest import.
The research should not focus too heavily on industry but on agriculture and services. The structure in priority order should be Services, Agriculture and finally Industrial. Moreover, it is necessary to gradually export goods by exporting services.
Ha, N.H.P. and Trinh, B. (2018) Vietnam Economic Structure Change Based on Vietnam Input-Output Tables 2012 and 2016. Theoretical Economics Letters, 8, 699-708. https://doi.org/10.4236/tel.2018.84047