Ercole, Roberto Geographic Agglomeration and Colocalization of Two -Digits Manufacturing in Vietnam Using Discrete-Space Models Original Citation Ercole, Roberto (2013) Geographic Agglomeration and Colocalization of Two -Digits Manufacturing in Vietnam Using Discrete-Space Models. In: Regional Scien

The paper aims to investigate the geographic employment distribution and the industrial concentration of two-digit manufacturing industries in 2010 among provinces and the main five municipalities in Vietnam using discrete and continuous-space statistics. The evidence shows that Vietnam was characterized by high inequality in terms of employment concentration where the strength flows of dwellers’ migration towards more developed areas reinforced the disparity. It is notable that few locations led the country’s economic growth such as Hanoi, Ho Chi Minh, Dang Nang, Long An, Binh Duong and Dong Nai. Besides this imbalance, an agglomeration bell emerged around Ho Chi Minh favouring a regional integration. Furthermore, the research shows a relative high concentration of low technology intensity industries, whereas medium-high and high technology intensity industries have a relative low employment concentration in Vietnam in 2010. This could be explained as the difficulties of those industries to recruit suitable skilled workers as low trained labour forces characterized the country, which does not favour business localization and start-up. JEL Classification: R11, R12, C21 Key words: economic agglomeration, discrete and continuous-space, autocorrelation, Vietnam. 1 INTRODUCTION Vietnam as one of the most dynamic emerging countries in the South-East Asia and it has witnessed a rapid economic growth in the last twenty years. The Vietnamese’s GDP constantly grew with an average of 7% between 2000 and 2012 (World Bank & Donor 1 This paper has been presented at the 23rd Pacific Conference of the Regional Science Association International (RSAI) and the 4th Indonesian Regional Science Association (IRSA) Institute on 2-­‐4 July, 2013 in Bandung, Indonesia. Working Group, December 06, 2011). Vietnam is densely populated and it is characterized by abundant workforce, which favours the establishments of labour-intensive industries (UNIDO & MPI, 2012). Moreover, the number of total enterprises in Vietnam grew more than 150% between 2005 and 2010 and the inward FDI largely grew more than 200% between 2005 and 2010, of which more than 85% within the manufacturing industry (General Statistics Office, 2011). This increase was mainly due to the reduction of barriers to foreign direct investment as Vietnam became a member of WTO in 2007. Despite these favourable economic conditions, there is little academic attention to Vietnamese economic geography with particular reference to the country’s agglomeration and industrial concentration (Ishizuka, 2010). Therefore, this research aims to fulfil this empirical gap investigating the economic agglomeration and the concentration of two-digit manufacturing industries in 2010 among Vietnamese provinces and the five main municipalities. Therefore, the discrete and continuous-spatial statistics will be employed such as the location quotient, locational Gini, the Moran’s I index, the Moran scatterplots and LISA statistics, in order to unfold the employment agglomeration and identify spatial clusters within and between Vietnamese locations in 2010. This research highlights that Vietnam was characterized by high inequalities in terms of employment concentration where the migration flows among locations fostered the polarization especially towards urban centres and more developed areas. The Red River Delta and the South East held 70% of the total country’s employment in 2010. This inequality became more evident within provinces and cities, for instance, Hanoi, Ho Chi Minh (hereafter HCM), Dang Nang, Long An, Binh Duong and Dong Nai held more than 50% of the total country’s employment, foreign direct investments, and value added. As a result, few locations in Vietnam led the economic development and this polarization inevitably created socioeconomic asymmetry among locations. Besides this imbalance, it is notable that an agglomeration cluster around the core business center (HCM) emerged in the South of Vietnam in 2010. This could be explainable as the favorable economic externalities in HCM fostered the economic growth of its surrounding regions such as Dong Nai, Long An and Binh Duong provinces and also because economic agglomerations may be sprawled in more than one administrative units. The high value of employment concentration in the South might promote regional integration. Furthermore, evidence shows that Vietnam was characterized by the concentration of low technology intensity industries such as manufacture of wearing apparel, the manufacture of leather and related products, and the manufacture of food products. In addition, the resource-intensive industries had a relative high concentration of employment, for instance, the manufacture of other non-metallic mineral products, manufacture of coke and refined petroleum products, and manufacture of tobacco product. By contrast, medium-high and high technology intensity industries showed a relative low concentration of employment such as manufacture of chemicals and chemical products, manufacture of computer, electronic and optical products. This paper is divided in five sections. First of all the literature background will be examined based on economic agglomeration forces, and a-spatial and spatial statistics in order to employed them empirically in Vietnam in 2010. Afterwards, the data collected will be described and the research’s results will be discussed based on employment agglomeration and autocorrelation, and the industrial concentration of two-digit manufacturing industries in Vietnam in 2010. Finally, conclusions and addresses for further research will be also