Services liberalisation in Vietnam

Abstract

Interest in the liberalisation of services trade has significantly increased since the mid-1980s. However, compared to goods trade, many aspects related to services liberalisation are underexplored. One of the reasons is the complexities and difficulties in quantifying non-tariff barriers in services trade. The first study in this dissertation addresses this issue in the case of Vietnam, a transitional developing economy. It develops a comprehensive time-series dataset based on a newly-constructed index that transforms non-numerical barriers in services trade to numerical measurements. The dataset reflects the changes over time of actual policy in selected service sub-sectors. Other results indicate a strong, positive impact of the accession to the WTO on the reform of the services sector in Vietnam; however, compared to developed countries such as OECD members, Vietnam’s services sector remains highly restricted. The motivation of the second and the third studies is to provide empirical evidence on the impacts of services reform on the productivity and employment of manufacturing firms, a subject which has been not well studied in the literature. Firm-level data is used in these two studies. Moreover, different from the conventional approach, where the interaction between the services sector and manufacturing sector is only examined in the case that services sector are providers of intermediate inputs to firms in the manufacturing sector (forward linkage), this dissertation also analysed the interaction where the services firms consume inputs from the manufacturing sector (backward linkage). The second study empirically examines whether manufacturing firms benefit from services reform. The findings complement the results from previous literature in that through the forward linkage, services liberalisation results in an increase in the productivity of manufacturing firms. On the other hand, for the first time, this study finds that controlling for the backward linkages increases the size of productivity gains resulting from increased services liberalization. The third study particularly analyses the employment impacts of services liberalisation on the manufacturing sector, using firm-level data, which has not been done before. Through the forward linkage, the result provides evidence on the decreasing trend in the employment of manufacturing firms when the services sector is liberalised. Meanwhile, Meanwhile, the impact through the backward linkage is found to be opposite with a smaller magnitude.