From Fields to Factories: Special Economic Zones, Foreign Direct Investment, and Labour Markets in Vietnam
Tevin Tafese / Jann Lay / Van Tran
From Fields to Factories: Special Economic Zones, Foreign Direct Investment, and Labour Markets in Vietnam
Journal of Development Economics | 2025
Abstract
Vietnam's deep integration into GVCs has been driven by the establishment of special economic zones (SEZs). This paper examines the local labour market impacts of this SEZ programme. We trace the built-up area of SEZs over time to construct a novel continuous measure of SEZ exposure using historical satellite imagery. In a difference-in-differences design with continuous treatment, we examine the impact of SEZ exposure on local labour market outcomes at the district-level for the period 2009–2019. We find that the expansion of SEZs has led to a rapid shift in employment from own-account and family work in agriculture to manufacturing in foreign firms. We also show that SEZ exposure leads to higher wages and more formal employment contracts. Earnings improvements are not confined to workers in foreign manufacturing firms, but spill over to workers in household businesses and domestic firms. The effects on women account for most of these impacts.
This report synthesises cutting-edge research on labour standards in global supply chains. Authored by researchers from the Research Network Sustainable Global Supply Chains, it examines the impact of global supply chains on decent work, sectoral variations, and the implications of evolving due diligence regulations.
