Economic and Social Upgrading in Global Value Chains: A Case Study of Vietnam’s Apparel and Electronics Sectors

13 May 2020

This report addresses the gap in studies on the impact of global value chains (GVCs) on both economic and social aspects, and highlights the need for Vietnamese firms to upgrade and balance economic and social considerations.

Vietnam’s economic transformation over the past two decades has been driven by international economic integration and domestic reforms. The rise of China has led multinational corporations (MNCs) to adopt the “China Plus One” strategy, relocating their manufacturing plants to Vietnam to avoid rising labour costs in China, a key contributor to Vietnam’s economic growth. As the country continues to develop, there are rising concerns about the suitability of this trend. The report  throws light on the critical role of Vietnamese firms moving up the value chain and enhancing worker productivity and income to maintain inclusive growth and address rising inequality. It also addresses a critical gap – that of existing studies focusing on the economic impacts of global value chains (GVCs), with limited attention to social considerations – by investigating the interplay between economic and social upgrading. It focuses specifically on the apparel and electronics sectors, which have been vital to Vietnam’s economic development and employ a substantial low-skilled workforce.

The report is divided into three parts: it introduces the characteristics of firms and workers involved in the survey, summarises evidence of economic and social upgrading, and conducts an analysis of the determinants of both forms of upgrading at the firm and worker levels.

The report provides insights into the complex dynamics of economic and social upgrading within Vietnam’s evolving economic landscape. By exploring the factors that influence upgrading at both the firm and worker levels, the report contributes to our understanding of how economic and social considerations intersect in the context of Vietnam’s development journey.