Skills policy for growth and development: The merits of local approaches in Vietnam

Highlights

• Skills policy prescriptions recommended for developing countries like Vietnam fail to reflect an accurate analysis of skills formation challenges.

• Vietnam policymakers must question the supply-side paradigm and address the demand side in more integrated ways.

• Vietnamese policymakers are seemingly unaware of the possible consequence of policy borrowing.

• Policies and strategies developed at local and regional levels may provide for a more effective way of addressing Vietnam’s growth and development ambitions.

Abstract

Vietnam has achieved rapid economic growth since opening-up its economy in 1999, but to achieve further growth the World Bank and others argue it must tackle intermediate level technical vocational skill shortages and gaps, as well as address the poor quality of its technical vocational education and training. The Vietnam government subscribes to such views, but the policy ‘remedies’ prescribed i.e. supply-side approaches and policy borrowing, as well as aspects of the initial ‘diagnosis’, seem highly questionable. Drawing on research on Vietnam’s manufacturing sector, we discuss the skills shortage diagnosis and stakeholders’ perspectives on the government’s policy prescriptions to argue for an approach that recognises the merits of local level strategies, as a more effective way of addressing Vietnam’s ambitions.

Introduction

By 2008 Vietnam had become recognised as a lower middle-income country, having achieved rapid economic growth since opening-up its economy in the 1990s (Ohno, 2014). However, it is has been argued by the World Bank and others, that to achieve further economic growth and industrialisation it must address skills mismatch problems (OECD and ILO, 2019; World Bank, 2013; Goodwin et al., 2014; di Gropello and Sakellarious, 2010). In this particular case, Vietnam is argued to have intermediate level technical vocational skill shortages and gaps, as well as poor quality technical vocational education and training (TVET) (see di Gropello and Sakellarious, 2010; Goodwin et al., 2014; Hilal, 2018).

To remedy the issues identified, and following strategies long encouraged and advocated by numerous international bodies (OECD, 2009; OECD and ILO, 2019; World Bank, 2013; Valiente, 2014), the Vietnam government has singularly focused on adopting ‘supply-side approaches’ to skills policy, neglecting demand-side initiatives, as well as borrowing education and training initiatives from developed countries (see Valiente, 2014). Government policy in Vietnam thus follows the imperatives of human capital theory i.e. that increasing the supply of skilled workers through investment in training and education will contribute to economic growth and technological upgrading (Becker, 1993). The investment is made, moreover, in education policies borrowed from elsewhere, with solutions originally formed in (and promoted by) developed countries borrowed to improve its TVET programmes (see World Bank, 2013; ADB, 2014; Kis, 2017).

The question we ask in this paper is whether such modernisation approaches to development best serve the needs of Vietnam, and by extension those developing countries to which such policies, or versions of such policies, are applied (Valiente, 2014: 45. See for example, Allais (2012) on South Africa; King (2012) on India; Palmer (2009) on Ghana). In addressing this question, we reflect upon government policy, focused as it is on the imperatives of human capital theory, and offer observations on the relationship between skills formation strategies and goals of economic growth and development in developing countries like Vietnam. Theoretically, the discussion of what governments should be doing on such matters, and the way investment in skills should be organised, is often nested in the distinction between neoclassical and statist approaches to increasing levels of human capital. The World Bank, for example, has often taken a leading role in supporting skills development within developing countries and encouraged neo-classical policies based on market delivery and consumer preferences. However, the historical and political underpinnings of the East Asian context align more closely with statist approaches, and the emergence of the ‘developmental state’ (Ashton et al., 1999). Over past decades the region has experienced significant in-flows of capital and embraced new technologies and processes of globalisation, and this has often been supported by state led economic and industrial policies, with education and skills development playing an enabling role (Benson et al., 2013).

Reforms in Vietnam suggest a shift from central planning to a market economy, but this shift is far from complete and is paralleled by multiple other social, political and economic transitions, which are argued to position it between ‘developmental state and neo-liberalism’ (Masina, 2012). But, our aim here is not to provide any further theoretical contribution of this type and pronounce on Vietnam’s convergence, or otherwise, with neoliberal/neo-classical and statist approaches, nor its wider place in the regional productive system. Our intention is, instead, to provide a multi-scaler analysis of skill formation policies that identifies mismatch between global policies and national and local practices. We utilise current understandings of vocational education and skills formation in the developing world to examine Vietnam’s development, and contribute to the wider body of empirical work concerned with critiquing approaches to skill formation issues in developing countries (e.g. Allais, 2012; King, 2009; McGrath, 2014; Palmer, 2009).

To get closer to understanding the ‘skills problem’ in Vietnam, we investigate the ‘diagnosis’ (skills mismatch and VET quality issues) as a basis for questioning the remedies prescribed and exploring the merits of alternative strategies. Our analysis is based on data from a large project exploring skills mismatch in the machine manufacturing sector in Vietnam, which involved policy makers, vocational education and training institutions and employers. We contend that current policy approaches inadequately serve Vietnam’s needs and, in making this argument, we draw attention to the lack of attention to demand-side initiatives and the organic and tentative emergence of skills and industrial policies at local levels (by which we mean provincial or city governments). Here, we offer comment on the potential for such approaches to foster growth and development in ways that are more sustainable than the current policy direction taken by the Vietnam government.

In what follows we provide an overview of Vietnam with regard to its economic growth and development, as well as related discussions of skills policy developments. We then outline the research design, before presenting our data across three sections: i) skills mismatch; ii) policy borrowing, and; iv) local policy responses. Discussion and conclusions complete the paper.