The essential piece of information that is required for these calculations is an estimation of the labor intensity of exports and import substitutes. The first row in table 14 is an export weighted average of gross output per worker in three sectors: garments and textiles, footwear and "other" light industries. It is based on a survey of 200 State-owned enterprises (SOEs) by the Ministry of Finance and shows that each worker produces on average $3,885 worth of output per year. The second row shows similar information for private foreign companies in light industry. According to data from the Ministry of Planning and Investment, the average gross output per worker in this sector is slightly higher than in SOEs, reaching $4,300. Finally, row three is an average between the first two rows. It is the best available estimate of the labor-intensity in Vietnam's exports and indicates that each worker produces $4,078 worth of output per year.

But when exports increase, so do imports. And while higher exports create jobs, higher imports tend to displace domestic workers. Thus, the last row in table 14 also shows estimates of the labor-intensity in Vietnam's industries that compete with imports. Due to the lack of comparable production and trade data, this sector is assumed to contain the following heavy industries: chemicals, machinery and equipment, and iron and steel. In these sectors, average output per worker is estimated at $9,200, indicating that the export sector is slightly more than twice as labor-intensive as import-substituting enterprises. This is well in line with previous estimates in developing countries and it is similar to the situation observed in Brazil, Indonesia or Thailand in the 1970s (see Krueger, 1983). It indicates that an expansion of trade according to the lines of Vietnam's comparative advantage should be beneficial to labor demand.

**Table 14: The labor intensity of exports and import substitutes**

|Sector|Output/worker<br>(dollars)|
|---|---|
|Export industries (SOEs)|3,855|
|Export industries (FDI)|4,300|
|<br>Export industries (average)|4,078|
|Import-substituted<br>industries|9,200|

_Source:_ Rows 1 and 4 are calculated from a survey of 191 State-owned enterprises by the Ministry of Finance. The second row is calculated from data from the Ministry of Planning and Investment. Row 3 is an average between row 1 and row 2.

Factor content calculations based on table 14 (and shown in Appendix I) suggest that a tripling of Vietnam's manufacturing exports would create between 1.5 and 1.7 million direct jobs in export-oriented companies, with a best estimate of 1.6 million jobs. In addition, if the production of domestically purchased intermediates for export production have labor requirements similar to exporting companies, another 700,000 jobs would also be created indirectly. Increased imports worth $6.5 billion, on the other hand, are likely to displace between 200,000 and 350,000 workers in import-substituting companies (with a best estimate of 260,000). In addition to these workers - essentially employees in SOEs- another 400,000 jobs may be lost in firms that produce intermediates for such import-substituting companies. The net positive employment effect of an additional $6.5 billion of manufacturing exports and imports is thus likely to lie between 1.3 and 1.4 million direct jobs, with another 300,000 indirect jobs.

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