VIETNAM NATIONAL UNIVERSITY, HANOI VIETNAM JAPAN UNIVERSITY DAO MAI ANH ASSESSING THE IMPACTS OF SUPPORTING INDUSTRY DEVELOPMENT POLICIES ON THE ELECTRONICS INDUSTRY MASTER’S THESIS VIETNAM NATIONAL UNIVERSITY, HANOI VIETNAM JAPAN UNIVERSITY DAO MAI ANH ASSESSING THE IMPACTS OF SUPPORTING INDUSTRY DEVELOPMENT POLICIES ON THE ELECTRONICS INDUSTRY MASTER’S THESIS MAJOR: PUBLIC POLICY CODE: 8340402.01 RESEARCH SUPERVISORS: DR. DANG QUANG VINH DR. TRAN LAM ANH DUONG Hanoi, 2022 2 COMMITMENT I declare that the Master thesis “Assessing the impacts of supporting industry development policies on the electronics industry" is the result of my research and has never been published in any work of others. During the implementation process of this project, I have seriously taken research ethics.
I collected all data from a reliable source, analyzed it, and cited all references according to regulations. I take full responsibility for the fidelity of my graduation thesis's number, data, results, and other contents. th Hanoi, 29 May 2023 Author of the thesis Đào Mai Anh 3 ACKNOWLEDGEMENT I would like to express my deepest gratitude to all those who have contributed to the completion of this thesis. Without their support, guidance, and encouragement, this work would not have been possible.
First and foremost, I am immensely grateful to my supervisors, Dr. Dang Quang Vinh and Dr. Tran Lam Anh Duong, for their invaluable guidance throughout my research. Their expertise, patience, and continuous support have been instrumental in shaping the direction of this study.
I am truly fortunate to have had the opportunity to work under their supervision and learn from their wealth of knowledge. I would like to extend my appreciation to the members of my thesis committee for their insightful feedback and constructive criticism. Their expertise and scholarly input have immensely enriched this research. I am indebted to the participants who generously gave their time and shared their experiences for this study.
Their willingness to be part of this research has been invaluable, and their contributions have greatly enhanced the quality and relevance of this work. I would like to thank my colleagues and friends for their support and encouragement throughout this journey. Their intellectual discussions, motivation, and camaraderie have made the research process more enjoyable and rewarding. I am grateful for their friendship and the lasting memories we have created together.
My sincere appreciation goes to my family for their unwavering support and belief in my abilities. Their love, encouragement, and understanding have been the driving force behind my academic pursuits. I am deeply grateful for their constant presence in my life, even during the most challenging times. 4 Finally, I would like to express my heartfelt gratitude to all the researchers, scholars, and authors whose work has been cited in this thesis.
Their contributions to the field have paved the way for this study, and I am honored to have built upon their insights and findings. In conclusion, I am profoundly grateful to all the individuals and institutions who have played a part in this research journey. Your contributions, whether big or small, have left an indelible mark on this thesis, and I am sincerely thankful for your support. Author of the thesis Đào Mai Anh 5 TABLE OF CONTENTS INTRODUCTION.
Scope of analysis. Contributions of the thesis. 6 CHAPTER I: THEORETICAL AND PRACTICAL BASIS OF SUPPORTING INDUSTRY AND ELECTRONICS INDUSTRY. Theoretical basis of supporting industry.
Concepts of supporting industry. Characteristics of supporting industry. Factors affecting the supporting industry. Criteria for assessing the level of supporting industry development.
The role of supporting industry development. Theoretical basis of electronic industry. Concepts of electronic industry. Characteristics of electronic industry.
Factors affecting the electronic industry. Supporting industry development policies in Vietnam. Current status and assessment. Ongoing supporting industry policies and assessment.
Electronics industry development policies in Vietnam. Current status and assessment. Ongoing electronics industry policies and assessment. Other countries' experience in supporting industry development.
Mechanism and policy. Cluster of industry linkages. Lessons learned from other countries’ experience in electronics industry development. 36 CHAPTER II: RESEARCH HYPOTHESIS AND METHODOLOGY.
38 CHAPTER III: ASSESSING THE IMPACTS OF SUPPORTING INDUSTRY DEVELOPMENT POLICIES ON THE ELECTRONICS INDUSTRY: DIFFERENCE-IN-DIFFERENCES APPROACH. DID model parameters and explanation. Reason for choosing control group as rubbery industry in DID model 43 3. Logarithmic values of the original data.
Treatment group and control group design. Descriptive statistics and data label. Descriptive statistics of variables. DID regression results.
DID regression results. DID regression results with other dependent variables. DID regression results with other dependent variables (except total revenue). OLS estimator in the presence of heteroskedasticity.
OLS estimator results. Time fixed effects and firm fixed effects. DID regression with time fixed effects and firm fixed effects. DID model parameters.
Industry type and code. Treatment group and control group design. List of enterprise types. List of region types.
List of variable labels. Logarithm of Yearly Total Revenue. Logarithm of Yearly Total Labor. Logarithm of Yearly Total Labor and Revenue.
73 LIST OF REFERENCES. Thesis statement The electronics industry has become an integral part of the global economy and is characterized by its rapid technological advancements and fierce competition. As a result, many countries have implemented policies to support the development of their domestic electronics industry in order to gain a competitive advantage in the global market. These policies include various forms of support such as tax incentives, research and development funding, infrastructure investment, and trade protection measures.
The effectiveness of these policies in promoting the growth and competitiveness of the electronics industry, however, remains a subject of debate. While some studies have shown that these policies have been successful in increasing the competitiveness of domestic firms and boosting economic growth, others argue that they have created inefficiencies, distortionary effects, and market failures. Therefore, this thesis seeks to assess the impacts of supporting industry development policies in the electronics industry. Specifically, this research will investigate the following research questions: 1.
What are the different types of supporting industry development policies in the electronics industry? 2. How effective have these policies been in promoting the growth and competitiveness of the domestic electronics industry? 3. What are the implications of the findings for policy makers, industry practitioners, and other stakeholders in the electronics industry? To answer these questions, this research will employ Difference in Difference (DID) method approach, combining qualitative and quantitative data collection and analysis techniques. The study will draw on data from firms.
The 2 findings of this research will contribute to the understanding of the impacts of supporting industry development policies in the electronics industry and inform policy makers and industry practitioners on the design and implementation of effective policies to promote the growth and competitiveness of the domestic electronics industry. Research rationale The rationale for conducting the thesis is as follows: Firstly, about the importance of supporting industries, including the electronics industry, it plays a crucial role in the development of a country's economy by providing essential goods and services to other industries. However, the development of supporting industries often requires significant investment and government intervention, which can be difficult to justify without evidence of their impact. Secondly, despite the importance of supporting industries, there is a lack of empirical evidence on the impact of supporting industry development policies, and importantly, in developing countries like Vietnam.
The thesis aims to fill this gap by providing empirical evidence on the impact of supporting industry development policies in the electronics industry in Vietnam. Thirdly, about the need for policy evaluation, evaluating the effectiveness of supporting industry development policies is essential to ensure that public resources are used efficiently and to identify areas for improvement. The thesis addresses this need by using the difference-in-difference method to evaluate the impact of these policies in the electronics industry in Vietnam. Overall, the thesis aims to provide policymakers and researchers with empirical evidence on the impact of supporting industry development policies, with a focus on the electronics industry in Vietnam.
The findings of the study can be used to inform policy decisions and to promote sustainable economic development in Vietnam and other developing countries. Research objectives The research is aiming at evaluating the effectiveness of government policies in promoting the development of the electronics industry and estimating the causal effect of supporting industry development policies on firms' performance in the electronics industry, using a DID model. Scope of analysis The analysis covers the time period from 2010 to the 2020, allowing for an examination of the longer-term effects of supporting industry development policies on the electronics industry in Vietnam, with the time span for the dataset being from 2010 to 2020. This time period could capture the implementation of key policies and initiatives that have affected the electronics industry in Vietnam, and allow for an assessment of their impact over time.
This is also the time the decision is issued “Decision 9028/QD-BCT of the Ministry of Industry and Trade approving the master plan on development of supporting industries until 2020, vision to 2030” (issued on 8 October 2014). The plan aims to promote the development of supporting industries to enhance the competitiveness of the Vietnamese economy, particularly in the context of increasing global integration and competition. The plan sets out a series of goals and targets for the development of supporting industries in Vietnam, including the creation of a number of industrial clusters and production zones focused on specific industries. It also emphasizes the need for investment in technology and innovation to enhance the capabilities of Vietnamese firms in the electronics industry, among other sectors.
The plan also includes a range of measures to promote the development of supporting industries, such as tax incentives, investment subsidies, and support for research and development activities. The plan recognizes the importance of partnerships between firms, both domestic and foreign, and the need for improved supply chain management and 4 logistics to support the development of supporting industries. Overall, the master plan approved in Decision 9028/QD-BCT reflects the Vietnamese government's commitment to promoting the development of supporting industries, including the electronics industry, and recognizes the need for a comprehensive approach that includes investment in technology, innovation, and supply chain management, among other factors. Other than that, there have been several policies aiming at supporting industries shown in “Decree No.
111/2015/ND-CP on the development of supporting industries”, “Decision No. 68/QD-TTg on approving the Supporting Industry Development Program from 2016 to 2025”, “Decision No. 1288/QD- TTg on the National program on industrial extension to 2020”, “Decision No. 1881/QD-TTg on the National program on industrial extension for the period of 2021 – 2025” and “Decision No.
598/QD-TTg on approving the Industry restructuring plan for the period of 2018-2020, with a vision to 2025”. Given the limited availability of data to measure other outcome indicators such as productivity, the focus of the analysis can be directed towards examining the impact of government policy on treated firms' revenue. The revenue variable can serve as a proxy for the overall financial performance and success of the firms in the treated group. By assessing the changes in revenue before and after the implementation of the government policy, the study can shed light on the effectiveness of the policy in generating positive outcomes for the treated firms.
To analyze the impact of government policy on treated firms' revenue, a DID regression model can be employed, with revenue as the dependent variable and the treatment variable (dummy variable indicating policy implementation) as the main independent variable. Controlling for other relevant factors such as firm- specific characteristics (e., industry type, region, enterprise type) can provide a more robust analysis. The coefficient associated with the treatment variable will indicate the average change in revenue attributed to the government policy. A 5 statistically significant and positive coefficient would suggest that the policy has a significant impact on revenue growth for the treated firms.