State Policy and the Development of Vietnamese Automobile Industry

This study focuses on the importance of state capacity in developing Vietnam’s automobile sector from a developmental state theory perspective. It claims that the Vietnamese state acts as the principal player operationalizing the industry via comprehensive state planning, industrial policy framework, and targeted interventions to multinational corporations (MNCs), local firms, and consumers. It uses a qualitative political economy methodology to assess systematically four aspects of state capacity: purpose of the development, policy tools, mechanisms of empowerment, and economic dependence. The research results show three main stages of development of Vietnam’s automotive industry. The first stage was characterized by an MNC-centric approach where MNCs were expected to provide financing, technology, and

management, as well as help the country integrate into global value chains. However, due to a lack of sufficient technology transfer and low rates of local content, an MNC-centric approach was abandoned, and the focus shifted to the second stage of development, which was aimed at fostering local companies. In this regard, the government substantially supported local champions like THACO, TC Motor, and VinFast to improve self-reliant industrial development and technological self-sufficiency. The third stage, which is anticipated, will need to adopt a market-driven approach, focusing on the demands of the expanding middle class and the changing demands of the market. The study provides a perspective on the state-led process

of industrialization in developing countries.

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