This Doctoral thesis investigates changes in the trade structure through international fragmentation of production
in global value chains (GVCs), the effects of international linkages on the skill structure of domestic labor demand,
and the impact of import competition on firms’ performances in Vietnam.
Chapter 1 elucidates what makes trade in intermediate inputs different from trade in final products, and total trade
in goods different from total trade in services. This chapter uses product-level international bilateral trade data for
the period 1995-2009, covering 40 countries, from the World Input-Output Database (WIOD). Constructing this
panel dataset into a gravity model, the Poisson pseudo-maximum likelihood (PPML) estimator is used for empirical
analysis. Estimation results show the importance of distinguishing trade in different products and whether they are
for intermediate use or final consumption, and that targeted policy matters. Economic freedom has a positive effect
on trade in services, but in contrast with manufacturing trade, regional trade agreements fail to show any positive
effect in facilitating trade in services.
Chapter 2 empirically investigates how international linkages affect the skill structure of domestic labor demand
by measuring elasticities of factor demand. Using data on labor compensation from the Socio-Economic Accounts
and industry-level international input-output tables from WIOD, a dataset for 40 countries over the period 1995-2009
is constructed. Based on an input-output model, an indicator that measures the pervasiveness of GVCs, “foreign
value-added in exports (FVAiX)”, is calculated. Including this index in a translog cost function, this chapter
estimates a system of variable factor demand equations, using the iterative seemingly unrelated regressions (ISUR)
method. Results reveal that participating in GVCs has both positive and negative effects on demand for different skill
types of labor. On the one hand, there is a positive trend for high-skilled workers, regardless of the region or GDP
per capita of the country. On the other hand, results indicate a widening gap between high- and low-skilled labor,
suggesting an increase in inequality, especially in low-income countries.
Chapter 3 uses the Vietnamese Enterprise Survey to explore the impact of import competition mainly from China
on firms’ performances in Vietnam. Not only are both Vietnam and China low-skill labor-abundant countries, but
they are also geographically proximate. This chapter estimates the effects of the increasing import competition from
China, low-wage countries and high-wage countries on survival, employment and other production activities during
the period 2000-2008. This firm-level study applies the instrumental variables (IV) estimation method. Main results
show that firms in Vietnam systematically adjust their product mix in response to pressure from increasing import
competition from China by switching their industries.
In conclusion, the results from Chapter 1 suggest that trade policies need to be customized based on the state’s
target trade and market in order to reap greater benefits from trade integration. Those from Chapter 2 indicate the
importance of policies that support flexible labor markets, so that when the extent of international linkages increases,
the groups suffering from losses could move across sectors and transfer their skills to new tasks. The results from
Chapter 3 suggest that policy reforms facilitating industry-switching may help lower the costs for groups that suffer
from an increase in global competition. These results have important policy implications with academic contribution.
Hence, all examiners certified that this thesis merits awarding a Doctoral degree in International Public Policy.