Regional income convergence in an emerging Asian economy: empirical evidence from Vietnam

Vietnam as an emerging economy has experienced strong economic growth since 1990 with an average annual income per capita growth of 8.8 per cent for 1990-2018. The country has around sixty provinces, and applying cross-section and time-series tests of convergence the analysis shows that approximately half of these have experienced a process of convergence towards the income level of Ho Chi Minh City (HCMC). Still, cities like HCMC and Ha Noi have a per capita income level several times higher than the lowest income provinces. The analysis also finds that provinces being a neighbour to the major city areas - and having more manufacturing and service industry activities than agriculture - are more likely to experience a process of economic convergence towards HCMC. This is also revealing that provinces having an infrastructure that can attract and adopt investments - being foreign investments or government funded activities - appear more likely to catch up with the high-income areas.