Innovating Vietnam’s TVET system for sustainable growth (VIETSKILL) (VIETSKILL)

Abstract:

Although Vietnam has been remarkably successful in attracting FDI in recent years, manyobservers argue that the impact of FDI on domestic firms has been disappointing. The expectedspillovers of knowledge and technology from foreign MNEs have been limited, partly becausefew local firms have been engaged as suppliers and subcontractors to the MNEs. One reasonfor the lack of integration into global value chains (GVCs) is a severe shortage of skilled labor.Vietnamese firms do not have the skills and capabilities needed to meet the productionstandards of GVCs. This skills gap is also a threat to sustainable economic growth – there is arisk that many MNEs may leave Vietnam if labor costs increase without a correspondingincrease in human capital and productivity.The purpose of this project is to forecast the skill demand in the FDI-sector (including its supplychain) and to design innovative partnership models for technical and vocational education andtraining (TVET) in Vietnam. The forecasting will be based on information on GVC upgradingtrajectories and skill demand at different stages of the value chain: in principle, the objective isto predict what types of skills the foreign MNEs would require in the medium-term future ifVietnamese labor costs were twice as high as today. Information will be collected throughinterviews with MNEs in Vietnam and from data sets outlining GVC upgrading patterns andlabor demand in countries that have experienced sustained increases in income levels togetherwith GVC upgrading and structural change. Using these demand predictions and data on theindustry’s own training activities, we will evaluate the current capacity of Vietnam’s TVETsystem to meet these challenges, identify reform requirements, and propose new partnershipmodels for TVET engaging a wide range of participants, including firms and industryassociations, the public sector, private education firms, and other stakeholders.