Inter-sectoral Interdependence and Growth in Vietnam: A Comparative Analysis with Indonesia and Malaysia

This study examines the sources of output growth in Vietnam during 1996-2000 using the national input-output (I-O) tables. It employs an extended growth-factor decomposition method, which is an extension of the standard growth-factor decomposition method, in which all industries are classified into the primary, secondary and tertiary sectors. It also conducts a comparative analysis of Vietnam, Indonesia and Malaysia. The major source of Vietnam's output growth was the expansion of exports. The secondary sector played a key role in Vietnam's output growth, as its demand effects induced more than half of total output growth, contributing not only to the output growth of the sector itself but also of the other two sectors through inter-industry linkages. Malaysia's growth pattern was similar to Vietnam's, in which export expansion was the main driver of growth and the secondary sector led output growth. However, heavy industries played a more important role than light industries in Malaysia. Indonesia exhibits a markedly different growth pattern than Vietnam and Malaysia, as its tertiary sector was a more important driver of economic growth.