Economic growth constraints in Vietnam: A study using the growth diagnostic approach

Abstract

Recent studies have clearly pointed out a decreasing trend of Vietnam's economic growth in the short and the medium terms. This paper presents a study applying the growth diagnostic method for Vietnam to determine growth constrains. The binding growth constrains of Vietnam are found to include a poor business environment; an underdeveloped infrastructure, especially the transportation network market; failures related to information externalities, learning externalities and coordination failures. Notably, the energy infrastructure could be a vital constraint in a near future, but is not a binding constraint at present. The inefficiency of financial intermediaries and the government's over-investment could become a binding constraint when the economy returns to its high growth path.