Quality-Industrial Zones and Production Linkages:Evidence from Vietnam

Hisaki Kono, Hoang-Minh Le, Manabu Nose and Yasuyuki Sawada

Discussion papers from Graduate School of Economics , Kyoto University

Abstract: This paper examines the local economic impacts of industrial zones (IZs) in Vietnam, focusing on how their sectoral orientation within production networks shapes effectiveness. Using panel data on registered firms and a newly compiled dataset on IZ locations and sectoral compositions, we estimate the dynamic effects of IZ establishment on firm entry and employment through staggered difference-in-differences and synthetic control methods. We find that IZs lead to sustained increases in both firm and worker density over a 6–10 year horizon, indicating substantial local economic gains. These effects are particularly pronounced in zones oriented toward downstream industries—those that create demand for upstream suppliers—while upstream orientation does not predict stronger outcomes. We further show that backward production linkages mediate these gains, suggesting that demand-side constraints, rather than input frictions, may be more binding in developing country contexts. The results highlight not only the overall effectiveness of IZs but also the importance of aligning industrial policy design with the structure of production networks to maximize spatial development benefits.

Keywords: Industrial zones; production linkage (search for similar items in EconPapers)
JEL-codes: O12 O14 R11 (search for similar items in EconPapers)
Pages: 47
Date: 2025-06
New Economics Papers: this item is included in nep-net and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:kue:epaper:e-25-005

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