Understanding Structural Transformation from a Regional Linkage Perspective: Evidence from Vietnam

Abstract

Structural transformation is one of the most crucial issues in the literature on economic development. This study aims to analyze the structural transformation of localities from the perspective of regional linkages by examining both inside and outside determinants in the case of a typical country undergoing a significant structural change, Vietnam. By employing the data of all 63 provinces from 2015 to 2018 extracted from the annual statistical yearbook, this study performs a mediation analysis with provincial productivity and income as the mediators. The research results show that outside factors that are based on metropolises’ characteristics are the origins of structural transformation in provinces rather than inside factors as per previous research. In addition to attracting labor and providing capital for neighboring areas, metropolises are also markets for the consumption of products and centers of information and knowledge in the provinces. These functions of metropolises have promoted the structural transformation of neighboring provinces.