Abstract
This study traces the intersectoral linkages or the dependence of industries on one another in Vietnam’s economy within the period of 2000–2012 basing on the input–output analysis. The total linkages—computed using Leontief inverse—are generally employed amongst policymakers as an essential reference in choosing the critical industry. However, for many countries that heavily dependent on imported inputs like Vietnam, total linkages can give an erroneous result. The paper shows how important are the domestic linkages, which is the inverse net of imports, in analyzing the importance of industries in the economy. Constructing the non-competitive input–output tables relying on the assumption that imports are distributed across industries in the same proportion as the gross domestic output of the corresponding industry, the paper finds that there is a considerable divergence between total and domestic linkages. The results imply that import plays a significant role in the intersectoral linkages in the Vietnamese economy. The strength of linkages of some sectors is due to the import utilization effects, but not domestic sectors’ real own ability to create linkages.
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There are two types of IO tables, ‘competitive’ and ‘non-competitive’, which differ on their treatment of import data. In the competitive IO tables, both domestically produced and imported inputs are lumped together in a single interindustry IO matrix, A, assuming that these inputs are perfect substitutes. This allows to compute total linkages using Leontief inverse \({(I-A)}^{-1}\). In contrast, non-competitive IO tables, inputs are clearly separated into two interindustry matrices: \({A}^{d}\) (domestic input coefficients) and \({A}^{m}\) (imported input coefficients), and this allows to compute domestic linkages using the inverse net of imports \({(I-A+m)}^{-1}\). For most countries, including Vietnam, only competitive type IO tables are available.
Rasmussen termed these indices as the Index of Power of dispersion and the Index of Sensitivity of Dispersion.
A similar approach sees in Hazari [14] and Acharya and Hazari [1]. Another method developed by Hazari [14] and Acharya and Hazari [1] is based on assumption that there is a proportionality relationship between imports and gross domestic output levels (called ‘proportionality assumption’). This alternative approach give similar results, which are available on request.
Unlike National Research Council [22], which is based on a 9-commodity breakdown, this paper disaggregates data into 86 sectors for more accuracy and validity of the content calculations. Almost studies for the case of Vietnam also use an instead aggregated classification of industries (for example, 22 sectors in Bui [6], 19 sectors in Nguyen and Bui [23]).
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Nguyen, H.T. Intersectoral linkages and imports of Vietnam: an input–output approach. IJEPS 15, 205–231 (2021). https://doi.org/10.1007/s42495-021-00057-2
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DOI: https://doi.org/10.1007/s42495-021-00057-2