Jonathan Haughton

Selected Papers and Articles

2000	Vietnam: Puzzles and Surprises (PowerPoint file)
Dec 2003	The Competitiveness of Vietnam’s Three Largest Cities (Adobe pdf file*)
	With Vu Khoang
	This study focuses on Vietnam’s three largest cities – Ho Chi Minh City, Hanoi, and Haiphong – and ask why growth rates have differed so much among them. The purpose of the study is to determine what policies and underlying conditions are conducive to rapid economic growth. There is clear evidence that countries and areas that are more competitive are able to achieve and maintain a higher level of affluence. We define a state, province or city as being competitive if it has in place the policies and conditions that ensure and sustain a high level of per capita income and continued growth. The measures of competitiveness in this report are largely based on a survey of business leaders in Hanoi, Haiphong and Ho Chi Minh City that was conducted in summer 2002. We obtained 544 valid responses out of 1,400 questionnaires sent out. Some results: In each of the three cities, respondents felt that the most urgent priority was to “effectively fight corruption”, with particularly clear support for this proposition coming from business people in Haiphong and			Ho Chi Minh City. The most positive news is that business people in all three cities agree that the procedures for starting up a new business are simple. Overall, the quality of infrastructure is considered to be neither particularly good nor bad. Land rent in the cities is viewed as being high. Respondents agreed that the supply of unskilled labor is ample, but some managers complained about a shortage of skilled personnel. Business leaders believe that they operate in a competitive environment. Ho Chi Minh City is the most competitive of the three cities, with an index of 5.7; Hanoi is not far behind, with an index of 5.6; and the laggard is Haiphong, with an index of 4.9. However, if this study covered the whole country, Haiphong’s position would certainly look better. The overall Economic Success Index is computed as the geometric mean of the component indexes. By this measure, Ho Chi Minh City scores highest, followed by Hanoi and Haiphong. This is the order that would be predicted using the competitiveness index.
Aug 2002	Trade Liberalization and Foreign Direct Investment in Vietnam (Adobe pdf file*)
	With Nguyen Nhu Binh
	In December 2001 a bilateral trade agreement (BTA) between Vietnam and the United States came into effect. The U.S. agreed to accord most favored nation (MFN) status to Vietnam, lowering the effective tariff on imports from Vietnam from 40% to 3%. Vietnam will lower its tariffs, protect intellectual property, allow U.S. firms to invest in most service sectors, eliminate trade-related investment measures, and bring transparency to trade policy. Using a static computable general equilibrium model, Fukase and Martin find that the BTA would double Vietnam’s exports to the U.S. and boost Vietnam’s GDP by 0.9%. Potentially more important is the effect that		the BTA would have on foreign direct investment (FDI) flows into Vietnam. We quantify this effect by first specifying and estimating a model of the determinants of FDI, using data from 16 Asian countries for 1990-1999. The model allows us to isolate the effect of MFN status (and WTO membership) on FDI inflows. The BTA should lead to 30% more FDI into Vietnam in the first year, and an eventual doubling of the flow. This would boost economic growth by 0.6 percentage points annually. However the inflow would only be maintained if Vietnam makes the necessary changes and joins the WTO by 2005.
April 2002	Ethnic Minority Development in Vietnam: A Socioeconomic Perspective
	Author(s): Bob Baulch, Truong Thi Kim Chuyen, Dominique Haughton, and Jonathan Haughton World Bank Working Paper No.: 2836
	Baulch, Chuyen, Haughton, and Haughton examine the latest quantitative evidence on disparities in living standards between and among different ethnic groups in Vietnam. Using data from the 1998 Vietnam Living Standards Survey and 1999 Census, they show that Kinh and Hoa (“majority”) households have substantially higher living standards than “minority” households from Vietnam’s other 52 ethnic groups. Subdividing the population into five broad categories, the authors find that while the Kinh, Hoa, Khmer, and Northern Highland minorities have benefited from economic growth in the 1990s, the growth of Central Highland minorities has stagnated. Disaggregating further, they find that the same ethnic groups whose living standards have risen fastest are those that have the highest school enrollment rates, are most likely to intermarry with Kinh partners, and are the least likely to practice a religion. The authors then estimate and decompose a set of expenditure regressions which show that even if minority households had the same endowments as Kinh		households, this would close no more than a third of the gap in per capita expenditures. While some ethnic minorities seem to be doing well with a strategy of assimilating (both culturally and economically) with the Kinh-Hoa majority, other groups are attempting to integrate economically while retaining distinct cultural identities. A third group comprising the Central Highland minorities, including the Hmong, is largely being left behind by the growth process. Such diversity in the socioeconomic development experiences of the different ethnic minorities indicates the need for similar diversity in the policy interventions that are designed to assist them. This paper—a product of Macroeconomics and Growth, Development Research Group—is part of a larger effort in the group to study household welfare and poverty reduction in Vietnam.
Feb 2002	Household Enterprises in Vietnam: Survival, Growth, and Living Standards
	Author(s): Wim P. M. Vijverberg and Jonathan Haughton. World Bank Working Paper No.: 2773
	Two-fifths of the household enterprises that operated in Vietnam in 1993 were still in business in 1998, after five years of rapid economic growth. Constrained by lack of education, credit, and effective demand in poor areas, and squeezed by the lure of wage labor in rich areas, household enterprises are most iprominent when agriculture is declining in importance but before the formal sector becomes established. In Vietnam almost a quarter of adults worked in nonfarm household enterprises in 1998. Based on household panel data from the Vietnam Living Standards Surveys of 1993 and 1998, Vijverberg and Haughton find some evidence that operating an enterprise leads to greater affluence. The data show that nonfarm household enterprises are most likely to be operated by urban households, by those with moderately good education, and by the children of proprietors. The authors were able to construct a				panel of nonfarm household enterprises; 39 percent of enterprises operating in 1993 were still in business in 1998. Those in the (more affluent) south of the country were less likely to survive, as were smaller and younger businesses. A pattern emerges from the data. In poor areas the lack of education, credit, and effective demand limits the development of nonfarm household enterprises. In rich areas there is the attraction of wage labor. Nonfarm household enterprises are thus most important in the period of transition, when agriculture is declining in importance but before the formal sector becomes established. The authors expect these enterprises to continue to play a modest supporting role in fostering economic growth in Vietnam. This paper—a product of Macroeconomics and Growth, Development Research Group—is part of a larger effort in the group to study household welfare and poverty reduction in Vietnam.
June 1998	The Reconstruction of War-Torn Economies (Adobe PDF file*)
	Abstract  This USAID-sponsored study asks what policies are needed, and in what order, to move a war-torn economy from devastation to a path of sustainable economic recovery. Since 1970, 42 countries representing 44% of world population have been seriously damaged by wars, which have claimed 11.9 million lives and created (by 1994) 15 million refugees. The study argues that economic development complements the political and security elements of peacebuilding, and so measures to promote economic development must begin as soon as there is even a prospect of peace. Donors must complement their traditional concerns - political reconstruction, internal security, humanitarian relief, and the rebuilding of	infrastructure -  with much greater attention to rebuilding the institutional infrastructure, in effect enhancing the capacity of countries to help themselves. Yet donors must be patient, because war-torn economies typically take a generation to recover to their pre-war level of affluence. Donors can, and should, get involved as early as possible, at a minimum gathering information which allows them to act swiftly when peace is more secure. It is important to build local decision-making and administrative capacity as quickly as possible, because this is a major bottleneck to recovery. Donors also need to be flexible, far more so than they would be normally. This message is being heard, as USAID, the World Bank, and others have put in place more supple procedures for disbursing funds in post-conflict societies. ð

* This file is in PDF format, and can only be read with Adobe Acrobat.

Jhaughto@sclas.suffolk.edu

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