Evolution of the informal and household business sectors in Vietnam in a time of growth and trade liberalization
Pasquier-Doumer, Laure; Pham Minh, Thai (2017), Evolution of the informal and household business sectors in Vietnam in a time of growth and trade liberalization, in Laure Pasquier-Doumer, Xavier Oudin, Nguyen Thang, The importance of household businesses and the informal sector for inclusive growth in Vietnam, IRD éd. : Paris, p. 43-62
Book titleThe importance of household businesses and the informal sector for inclusive growth in Vietnam
Book authorLaure Pasquier-Doumer, Xavier Oudin, Nguyen Thang
Number of pages327
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Développement, Institutions et Modialisation [LEDA-DIAL]
Pham Minh, Thai
Abstract (EN)Following the Doi Moi policy and in a context of rapid growth of labour supply, the labour market has undergone important structural changes. The major changes came from the dismantling of cooperatives and the shrinking of the state sector following the restructuring of state-owned enterprises (SOEs). This led to a rapid expansion of labour in the household business sector, which has been the main job provider for two decades. The informal sector developed accordingly as part of the non-farm HB sector.1During the past decade, the Vietnamese economy has been marked by extensive growth and trade liberalization. The dual view of informal economy predicts that the informal sector should shrink as the economy grows (La Porta and Shleifer, 2014). The expansion of the formal sector leads to the decline of the informal sector in relative and eventually absolute terms. Informal household businesses disappear because they cannot compete with the much more productive formal firms and because the demand constraint for formal products is released with growth. In the meanwhile, most theories, especially the structuralist view, agree that globalization and the opening of markets in developing economies to trade should increase the size of the informal sector (Bacchetta et al., 2009). The formal sector is triggering strong competition and it has reacted by outsourcing to the informal sector in order to reduce labour costs.
Subjects / KeywordsInformal sector; Social Networks
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