The Chu Lai Open Economic Zone and Rural Development

The Chu Lai Open Economic Zone and Rural Development
Name:The Chu Lai Open Economic Zone and Rural Development

The Chu Lai Open Economic Zone and Rural Development: Central Planning's Laboratory for Policy and Institutional Innovation 

Eli Mazur, David Dapice, Vu Thanh Tu Anh

UNDP Policy Dialogue Paper 2008/2
Ha Noi, July 2008


Viet Nam is still a predominantly rural country, and therefore the creation of good, stable jobs in rural areas is a key policy priority. Export Processing Zones (EPZ) are one of the instruments used in Viet Nam and other developing  countries  to  spur  employment  growth  outside  of  the major  cities. These  zones  combine  good infrastructure with other incentives to attract investors to locations that they may not have considered in the absence of the EPZ.

This paper examines the experience of the Chu Lai Open Economic Zone in Quang Nam province to distill some lessons about the performance of EPZs as a policy instrument to stimulate rural development. 

The paper argues that local officials have invested too much time and money in the attempt to attract foreign investors rather than concentrating on the domestic private sector. Although foreign investment is desirable, Quang Nam is more likely to emerge as a domestic business hub rather than a production location for major multinational  corporations.  Local  government  should  focus  on  the  essential  task  of  helping  the  domestic private sector gain legal and affordable access to land and capital. In addition, the authors recommend further decentralization of authority to local government to enable Chu Lai to engage in policy experiments without the prior approval of central government authorities.

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