Energy has played an extremely important role in the rapid economic development of Vietnam since the beginning of market-oriented economy reforms in 1986. Energy sectors not only generate revenue with export products, but also directly support the growth of other industrial sectors. However, is the continued growth of energy sectors and their vital role in supporting economic growth sustainable? What would happen if there were unexpected exogenous shocks to the energy sectors so vital to the Vietnamese emergent economy? These are critical questions whenever designing suitable energy and economic development policy and strategic planning. This study provides partial answers to the above-mentioned questions by (1) examining the historical patterns and sources of energy growth of the Vietnamese economy, and (2) exploring how the economy would be affected if impacted by exogenous energy shocks. In this study, we first apply the deviation from proportional growth (DPG) method together with some typical input-output analysis measures, such as backward and forward linkages, to examine how energy sectors grow and the role energy sectors played during the economic growth between 1996 and 2007. Secondly, we perform a SAM (social accounting matrix) structural path analysis to examine the transmission paths of exogenous energy shocks to the Vietnamese economy over the period 2007 - 2011, and compare these results with the conventional SAM multipliers. We will also utilize the SAM price model to examine the effects of an increase in energy prices on the Vietnamese economy. Finally, we construct a SAM constrained fixed-price model to explore the effects of restricted energy supply on the Vietnamese economy. The results of the analysis will provide useful information to the Vietnamese government decision makers regarding the future paths and development of the energy sectors as well as the overall economic development.

Contents
ABSTRACT I
ACKNOWLEDGEMENTS II
CONTENTS III
LIST OF FIGURES VI
LIST OF TABLES VII
CHAPTER 1. INTRODUCTION 1
CHAPTER 2. SOURCES OF GROWTH OF THE VIETNAMESE ENERGY AND INDUSTRIAL SECTORS 7
1. INTRODUCTION 7
2. LITERATURE REVIEW 8
2.1 Input-output analysis of the Vietnamese economy 8
2.2 Why use an I-O model? 9
3. DATA 13
4. RESEARCH METHOD 15
4.1 Input-Output theory 15
4.2 Leontief inverse matrix 17
4.3 Economic indicators used for comparative analysis 17
4.4 Computation of the backward and forward linkages 19
4.5 The deviation from proportional growth (DPG) method 20
5. RESULTS 22
5.1 The Vietnamese energy sectors since socialist-oriented market economy reform 22
5.2 Sectoral share of national product and income 23
5.3 The role energy sectors play during the course of economic growth 26
5.4 Sources of growth of Vietnamese energy and other industrial sectors 29
6. CONCLUSIONS AND POLICY SUGGESTIONS 34

CHAPTER 3. TRANSMISSION PATHS OF ENERGY SHOCKS ON THE VIETNAMESE ECONOMY, 2007-2011 38
1. INTRODUCTION 38
2. LITERATURE REVIEW 39
3. DATA SOURCES 41
4. METHODOLOGIES 42
4.1 The Social Accounting Matrix 42
4.2 Structure of the Vietnamese SAM 44
4.3 SAM multiplier analysis and decomposition 46
4.4 Structural Path Analysis (SPA) 50
5. RESULTS AND DISCUSSION 56
5.1 The impact of energy shocks on the Vietnamese economy 56
5.2 The impact of energy shocks on enterprise groups 60
5.3 The impact of energy shocks on household groups 63
6. SUMMARY, CONCLUSIONS, AND POLICY IMPLICATIONS 84
CHAPTER 4. ECONOMIC IMPACTS OF ENERGY PRICE SHOCKS AND THE EFFECTS OF RESTRICTED ENERGY SUPPLY ON THE VIETNAMESE ECONOMY 87
1. INTRODUCTION 87
2. LITERATURE REVIEW 90
3. RESEARCH METHOD AND DATA SOURCES 91
3.1 Decomposition of the Price Multiplier 92
3.2 Constrained Fixed Price Model 94
3.3 Sources of Data 96
4. EMPIRICAL RESULTS 96
4.1 The potential impact of energy price change on Vietnam economy in period 1997-2011 97
4.2 The effect of energy supply on the Vietnam economy in period 1996-2007 109
5. SUMMARY, CONCLUSIONS AND POLICY SUGGESTIONS 111
CHAPTER 5. SUMMARY OF MAJOR FINDING, CONCLUSIONS AND POLICIES IMPLICATIONS 114
1. SUMMARY AND POLICY IMPLICATIONS 114
2. LIMITATIONS AND SUGGESTIONS FOR FUTURE RESEARCH 118
REFERENCES...………………………………………………………………………………120
APPENDIX A. ECONOMIC SECTORS’ CLASSIFICATION AND CODING IN VIETNAM’S SAM 2007, 2011 126
APPENDIX B. THE DEVIATION FROM PROPORTIONAL OF VIETNAM ECONOMY WITH JAPAN AND NIES 127

 
List of Figures

Figure 1. Economic growth and energy import/export 1
Figure 2. Economic growth energy consumption and supply. 2
Figure 3. Overview of the research methods and procedures. 3
Figure 4. Overview of the research methods and procedures. 14
Figure 5. A general view of an input-output table. 15
Figure 6. Fundamental input-output relationship. 18
Figure 7. The ratios of energy sectors shares in gross national product (yi/y). 23
Figure 8. The ratios of energy sectoral shares in gross national income (vj/v). 23
Figure 9. The energy sectors input to total input ratios (xj/x). 24
Figure 10. Energy sectors value added to final demand ratios (vj/yj). 24
Figure 11. Intermediate output to final demand ratios (xi/yi). 25
Figure 12. Energy sectors intermediate input to value added ratios (xj/vj). 25
Figure 13. Energy sectors final demand to total output ratios (yi/xi). 26
Figure 14. Energy sectors value added to total input ratios (vj/xj). 26
Figure 15. Backward and forward linkages in the Vietnamese economy in 1996.. 27
Figure 16. Backward and forward linkages in the Vietnamese economy in 2000... 28
Figure 17. Backward and forward linkages in the Vietnamese economy in 2007. 29
Figure 18. The economy-wide circular flow of income. 29
Figure 19. Simplified interrelationships among SAM accounts. 49
Figure 20. Elementary path.. 51
Figure 21. Elementary path with adjacent circuits. 52
Figure 22. Network of elementary paths with adjacent circuits. 53
Figure 23. World crude oil price and Vietnam’s average gas price. 88
Figure 24.. SAM framework 94



 
List of Tables

Table 1. Vietnam Input-Output Table 12
Table 2. DPG Decomposition for Vietnam, 1996-2000 31
Table 3. DPG Decomposition for Vietnam, 2000- 2007 32
Table 4. Basic Structure of the Vietnamese SAM 45
Table 5. Schematic Social Accounting Matrix 46
Table 6. Summary of the main functions in this research 55
Table 7. Decomposition of Multipliers - The impact of energy shock on the Vietnamese economy 57
Table 8. Structural path analysis and the decomposition of the impact of energy shock on economy 59
Table 9. Decomposition of multiplier - the impact of energy shock on enterprise groups 61
Table 10. SPA and the decomposition of the impact of energy shock on enterprise groups 62
Table 11. Decomposition of multiplier- the impact of energy shock on urban farm household 64
Table 12. SPA and the Decomposition - impact of energy shock on urban farm households in 2007 67
Table 13. SPA and the Decomposition - impact of energy shock on urban farm households in 2011 68
Table 14. Decomposition of Multiplier- the impact of energy shock on urban nonfarm household 70
Table 15. SPA and the Decomposition - impact of energy shock on urban nonfarm households in 2007 72
Table 16. SPA and the Decomposition - impact of energy shock on urban nonfarm households in 2011 73
Table 17. Decomposition Multiplier- the impact of energy shock on rural farm household 75
Table 18. SPA and the Decomposition - impact of energy shock on rural farm households in 2007 77
Table 19. SPA and the Decomposition - impact of energy shock on rural farm households in 2011 78
Table 20. Decomposition Multiplier- the impact of energy shock on rural nonfarm household 80
Table 21. SPA and the Decomposition - impact of energy shock on rural nonfarm households in 2007 82
Table 22. SPA and the Decomposition - impact of energy shock on rural nonfarm households in 2011 83
Table 23. Vietnam’s Energy Supply and Demand 1990-2025 89
Table 24. Structural Path Analysis and the Decomposition of Coal Price Influence…...…………….…..98
Table 25. Structural Path Analysis and the Decomposition of Crude Oil Price Influence……………...100
Table 26. Structural Path Analysis and the Decomposition of Petroleum Price Influence….……….….102
Table 27. Structural Path Analysis and the Decomposition of Electricity Price Influence……….……..104
Table 28. Decomposition of Price Multiplier (coal, petroleum)……….………………………………...106
Table 29. Decomposition of Price Multiplier (electricity, crude oil)……………………………………108
Table 30. The effect of energy supply on the Vietnamese economy in 1996……………………………109
Table 31. The effect of energy supply on the Vietnam economy in 2000……………………………….110
Table 32. The effect of energy supply on the Vietnamese economy in 2007………………..…………..111

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