Research 2005

Improving Industrial Policy Formulation (2nd printing) (Jul.2005)--VDF just issued the second printing of Improving Industrial Policy Formulation (Hoan thien chien luoc phat trien cong nghiep Viet Nam) edited by Prof. Nguyen Van Thuong (Rector, National Economics University) and myself and published by the Publishing House of Political Theory in Hanoi. The book is available in English and Vietnamese. The first printing in March 2005 has been all distributed. The second printing improves text and figure style but the content remains the same as the first.

This book is a collection of VDF industry research in 2004. It proposes the renewal of Vietnam's industrial policy methodology from planning and numerical targets to competitiveness and positioning strategies in the dynamic context of East Asia. It studies several key industrial sectors in depth including motorbike, automobile, electronics and "supporting industries." All of the papers in this volume were presented to policy makers (including Minister of Industry HE Hoang Trung Hai) at various symposiums and workshops.

The First VDF Tokyo Conference on the Development of Vietnam (Jun.18, 2005)--This conference was held at GRIPS and attended by 47 people. The following presentations were made:
   Prof. Kenichi Ohno (GRIPS; from copycats to quality)
   Prof. Masaya Shiraishi (Waseda; Mekong Region cooperation)
   Pham Thai Binh (IUJ; money demand)
   Le Viet Anh (Nagoya Univ; FDI & growth)
   Tadashi Kikuchi (Keio Univ; Gini inequality)
   Pham Vu Thang (U of E. Anglia; garment industry)
In addition, "one-page presentations" by 20 researchers from all over the world were displayed. After the conference, an informal exchange was held at a nearby restaurant. more

Mission visits Honda

Vietnam's Ministry of Industry (MOI) visits Tokyo (May/Jun. 2005)--GRIPS/VDF invited Mr. Le Van Duoc (Director) and Mr. Cao Xuan Thanh (Deputy Director), Planning Department of Vietnam's MOI, to Japan. The purpose of their mission was to study and exchange views on industrial policy formulation methodology and government-private sector linkage for a latecomer country under globalization. They presented their policy concern at a GRIPS workshop on May 30. They visited METI (3 meetings), JBIC, JETRO, RIETI, DBJ, Tokyo Univ., Waseda Univ. and Honda. This mission was part of GRIPS' Center of Excellence Project funded by Monbukagakusho. mission report

McKinnon on China's foreign exchange (May 2005)--The May 26 issue of The Shanghai Securities News published Prof. McKinnon's essay on "Limited Foreign Exchange Flexibility for China: A Two Percent Solution?" Prof. McKinnon argues that China must now do two things: (1) execute capital account liberalization carefully with proper regulation on foreign exchange exposure and foreign currency borrowings in order to avoid Asian Crisis-like shocks; and (2) introduce a Bretton Woods-like two percent band around the current central rate of 8.28. He wants China to go slowly rather than yielding to the American pressure to devalue the yuan or lift capital control too quickly. full draft (may be a bit different from actually published version)

VDF Conference in media (May 2005)--The May 6 issue of Thoi bao Kinh te Viet Nam (Vietnam Economic Times) carried a 2-page article on the VDF conference on industrial strategy in March 2005. Keynote speeches by Hoang Trung Hai (Minister of Industry) and myself were featured. The views of four other Vietnamese and Japanese experts were also introduced. In my speech, I compared industrial policy formulation between Vietnam and Thailand. Both countries aim to industrialize under global and regional integration, but the Thai approach is more open and linked more closely to the private sector partly due to its higher income and longer history of FDI-led growth. The Thai automobile master plan is much more detailed in action plans while the Vietnamese automobile master plan is more detailed in production and export targets by type of vehicle. With proper modifications, Vietnam can learn much from Thailand, a country that goes ahead of Vietnam in globalization and market orientation. Thailand has also weaknesses, namely inability to develop supporting industries and human resources even after four decades of industrialization. We must learn from their mistakes too. The VDF-MOI Thai mission in Feb.-Mar. 2005 was behind these conclusions. mission report  my slides

With Hanoi People's Committee (May 2005)--Recently I had an informal discussion with the Science & Technology Dept. of Hanoi People's Committee (municipal government).

HPC: We want VDF to help draft a master plan to develop Hanoi faster. We want to target IT, electronics, biotech, etc but we need scientific proof that these are the right choices.
Ohno: I know Hanoi has the list of "preferred" industries but they are not effective. How about abolishing the list? Why don't you let enterprises decide sectors? Government should clarify its development vision and support private activities, but it should not micromanage investment choices.
HPC: Hmmm. We never thought about this, but maybe you can proceed that way.
Ohno: You must differentiate and position yourself. I suggest that Hanoi declare to become a Free Economic Zone with strong FDI marketing and quick response to businesses. This should send a good signal to potential investors. You must also solve problems associated with growth like traffic, environment, labor mobility, housing, land price inflation, etc. That should be the main contents of the master plan.
HPC: Is there a good methodology to do all this?
Ohno: You don't need any math or econometric model. Professors and officials are no good at concrete strategy making, so you must listen to businesses. When VDF studies industries, our only methodology is to listen to businesses a lot and find out real problems. Our role is to summarize and present their ideas effectively, not to provide abstract theories.

McKinnon's new book (Apr.2005)--Prof. Ronald I. McKinnon, my former academic advisor at Stanford University, just published a book, Exchange Rates under the East Asian Dollar Standard: Living with Conflicted Virtues, MIT Press, 2005. His main ideas include (i) the desirability of keeping the dollar as the key currency in East Asia (rather than installing a new currency basket); (ii) analysis of political pressure to appreciate the currency of emerging surplus country (previously Japan, now China); and (iii) the problem of a surplus country which accumulates a huge amount of external assets denominated in someone else's currency (typically dollar) and therefore faces enormous exchange risks. I will introduce some of his ideas in my lectures.

About GDF (Apr.2005)--The GRIPS Development Forum (GDF), established in early 2002, is a research unit in GRIPS specializing in development and aid policies. We aim at practical and realistic advice and policy impact. I am one of the founding professors. The GDF office is located on the fourth floor of new GRIPS. We work intensively with the Japanese government to help formulate its ODA policy. We also work on specific issues including aid modality difference between East Asia and Africa, reassessing the role of large-scale infrastructure in development design, drafting Japan's ODA strategies for Vietnam (2004) and Ghana (ongoing), cooperating with ODI (British aid think tank), and running VDF (see below).

About VDF (Apr.2005)--The Vietnam Development Forum (VDF) is one component of the GRIPS "Center of Excellence" (COE) research project (2003-2008) funded by Monbu Kagakusho (MEXT). The project aims at improving Vietnam's development policy through extensive networking and mobilization of young local talents. In March 2005, we organized a research mission to Thailand jointly with the Vietnamese Ministry of Industry and hosted a conference on industrial policy formulation in Hanoi where Mr. Hoang Trung Hai (Minister of Industry) and myself were the main speakers. For more, see VDF web. Since I am the leader of VDF on the Japanese side, I must frequently be in Hanoi where VDF's main office is located. I ask for your understanding if I am not always available in Tokyo. VDF also has a Tokyo branch within GDF.

Japanese book on Japan (Apr.2005)--In Feb. 2005 I published a Japanese book, Tojokoku Nippon no Ayumi: Edo kara Heisei madeno Keizai Hatten (The Path Traveled by Japan as a Developing Country: Economic Growth from Edo to Heisei) from Yuhikaku (2,300 yen + tax). This book is actually a Japanese translation of my English lecture, Economic Development of Japan, offered to GRIPS students from 1998 to 2003. Unfortunately, this course is no longer offered despite my wish. But if you are interested, you can read the contents in English (85% same as the Japanese version) in this web.

English and Vietnamese book on industrial strategy (Apr.2005)--VDF just printed a preliminary version of Improving Industrial Policy Formulation (Hoan thien chien luoc phat trien cong nghiep Viet Nam) edited by Prof. Nguyen Van Thuong (Rector, National Economics University) and myself, and published by Publishing House of Political Theory, Hanoi. This volume contains nine selected papers VDF produced in its first year (2004-05). It proposes the concrete method for designing industrial strategy in a developing country like Vietnam facing rapid international integration, analyzes specific sectors like electronics, motorbike and automobile, and specific issues like supporting industry promotion and optimum parts procurement pattern. The book is available in two languages. We are printing them more formally now, but if you desperately want to read the preliminary versions, I have some spare copies. All chapters are also downloadable from VDF web.