The Economic Case for Education

in Vietnam
Harry Anthony Patrinos
Pham Vu Thang
Nguyen Duc Thanh

Education Global Practice

December 2018
_x000C_Policy Research Working Paper 8679

Abstract
Education is central to the development of human
capital. lower than the regional average. The
returns to secondary Vietnam has made significant
progress. This paper reviews education are low, but
not much lower than the regional
existing research on the returns to education and
makes the average. The returns to
tertiary education are high, have
case for investment in schooling. In Vietnam, the
returns increased considerably, and
are about 20 percent. Therefore,
to schooling are 10 percent overall. The returns to
primary investing in higher
education makes sense for the individual
and secondary education have declined over time
and are and her family.
This paper is a product of the Education Global
Practice. It is part of a larger effort by the World
Bank to provide open
access to its research and make a contribution to
development policy discussions around the world.
Policy Research
Working Papers are also posted on the Web at
http://www.worldbank.org/research. The authors
may be contacted at
hpatrinos@worldbank.org.

The Policy Research Working Paper Series

disseminates the findings of work in progress to
encourage the exchange of ideas about
development issues. An objective of the series
is to get the findings out quickly, even if the
presentations are less than fully polished. The
papers carry the
names of the authors and should be cited
accordingly. The findings, interpretations, and
conclusions expressed in this paper are entirely
those of the authors. They do not necessarily
represent the views of the International Bank for
Reconstruction and Development/World Bank and
its affiliated organizations, or those of the
Executive Directors of the World Bank or the
governments they represent.

Produced by the
Research Support Team
_x000C_ The Economic Case for Education in
Vietnam 1

Harry Anthony Patrinos

 World Bank

Pham Vu Thang
VNU University of Economics
and Business

Nguyen Duc Thanh

Viet Nam Institute for Economic and
Policy Research (VEPR),
VNU University of Economics
and Business

Keywords: Returns to education; Vietnam;

Schooling
JEL codes: J24 J31 C83

1
Thanks to Michael Crawford, Ousmane Dione,
Nguyen Hoang Hai, Amer Hasan, Keiko Inoue,
Dilip Parajuli, George Psacharopoulos, Chris
Sakellariou, Dung Kieu Vo and Michel Welmond
for helpful comments.
_x000C_Introduction

Education is positively related to economic growth.

In addition, education is important in
determining lifetime returns of individuals.
Economists use the Mincer (1974) equation to
explain
(and estimate) employment earnings as a function
of schooling and labor market experience. The
equation provides estimates of the average
monetary private returns of additional education.
This
information is important for policy makers who
must decide on education spending, prioritization
of schooling levels, and education financing
programs such as student loans.

Research suggests that each additional year of

education produces a private (i.e., individual) rate
of return to schooling of about 10 percent per year.
Estimates range from a low of 1 percent to
more than 20 percent in some countries
(Montenegro and Patrinos 2014; Patrinos 2016).
Globally,
the returns to tertiary education are highest,
followed by primary and then secondary schooling;
this represents a significant reversal from many
studies’ prior results (Psacharopoulos and Patrinos
2018). The returns are highest in Sub-Saharan
Africa and globally higher for women than for men.
Policy makers can learn much from these estimates.
For example, further expansion of university
education appears to be very worthwhile for the
individual, meaning that governments need to find
ways to make financing more readily available, and
that high rates of return are found through
investment in girls’ education.

A dollar invested in a one-year increase in the

mean years of schooling generates more than $5 in
additional gross earnings in low-income countries
and $2.5 in lower-middle income countries
(Education Commission 2016). This is the case
even after considering the costs incurred by
governments and individuals and the current
variability in education quality across countries.
This
is equivalent to a rate of return of 10 percent and 7
percent.

Vietnam has made significant progress. In this

review of the research on the returns to education
in Vietnam we find that the overall private rate of
return to schooling in Vietnam is at the global
average but higher than in most countries in the
region, demonstrating that further investment in
education is a sound priority. Returns to primary
and secondary education have declined over time
and are lower than the regional average. The
returns to secondary are low, but not much lower
than
the regional average. The returns to tertiary
education are high, and have increased
considerably,
and are about 20 percent. Investing in higher
education, therefore, makes sense for the individual
and her family. Education is central to the long-
term development of human capital and to
economic growth. Vietnam can continue to expand
upper secondary and post-secondary education
given the high returns to tertiary education. Given
the relatively high private and social returns to
higher education, some level of cost-recovery is
warranted. Care should be taken to expand higher
education equitably and sustainably, and to
improving quality. However, most of the data
reviewed
here goes to 2012. Going forward, more recent data
and analysis are needed.

The Case of Vietnam

Major economic reforms in Vietnam since 1986
have included several measures to liberalize the
labor market. Salary reforms were introduced in
1993. In 1995, a labor law was passed, and a labor
code was published that covers a wide range of
labor issues including labor contracts, collective
bargaining, social insurance, working conditions
and training. Labor market adjustments occurred
2
_x000C_during and after the East Asia economic
and financial crisis of 1997 to 1999. The period
2002 to
2010 saw several revisions to Vietnam’s Labor
Codes to implement international regulations and
to better protect the rights of both employees and
employers. Prior to 2006, the state had one
general minimum wage that applied throughout the
country. However, since 2007 there are FDI
firm and non-FDI firm minimum wage rates, which
vary per the region that the firm operates in.
There are four defined regions, which are classified
per a socio-economic standards index. Thus,
there are eight minimum wages, which cannot be
less than the state’s general minimum wage. The
general minimum wage is mostly applied to state
sector employees.

Vietnam has made significant progress in education

in terms of access and quality. The country
has achieved universal preschool education for
five-year-old children and primary education and
is working towards achieving universal lower
secondary education.

Vietnam has achieved high levels of student

learning. Per the recently published Program for
International Student Assessment (PISA), Vietnam
surpasses the OECD country average and
many developed economies and places in the top
10 overall in science achievement. The 2015
PISA, with its focus on science, was no exception.
Vietnam was clearly in the top 10 worldwide
in science. This bodes well for preparing students
for the world of work with the 21st century skills
they need to succeed. Science and technology are
fundamental to people’s futures. Moving
forward, the priority is to focus on higher levels of
schooling.

However, the current higher education financing

mechanism falls short. It fails to provide
incentives for higher education institutions to
improve quality and relevance to respond to labor
market demand (World Bank 2017). The Higher
Education Law of 2012 provides the legal basis
for substantial reform in governance and financial
mechanisms, but the required decrees and other
elements of the normative framework need to be
developed. There has been rapid expansion of
enrollments in both public and private higher
education institutions. The higher education budget
will not be able to absorb the whole cost, which
will require some level of “cost-sharing” going
forward. Higher education financing needs to
prioritize, promote competition, ensure education
equity (or support disadvantaged students),
encourage the internationalization of universities,
and
generate performance-orientation to incentivize
higher education institutions to improve quality
and relevance. Higher education financing needs to
move towards better prioritization of public
resources towards areas with high social returns.

Higher education needs urgent attention to meet the

demands for high-quality human resources.
Enrollment in higher education has doubled
roughly every five years over the last several
decades
but the policies of education finance, namely,
tuition fee, public financing and private sector
contribution have not been reformed efficiently,
pushing higher education to the race of low quality
and low cost. Graduates lack the skills required by
employers. Research institutes and universities
provide too little research, and what is produced is
mostly not of sufficient quality and relevance
for the economy’s needs. The government has been
providing more autonomy to some key
institutions and universities, setting up an
accreditation system and raising the tuition fee
ceiling
for the period of 5 years.

Perhaps the first study of the benefits of education

in Vietnam appeared almost 50 years ago
(Stroup and Hargrove 1969). In an analysis limited
to rural South Vietnam in 1964, another year
3
_x000C_of schooling increased earnings by 17
percent. In 1992, on average, the estimates of rates
of return
to schooling were relatively low, at about 5 percent.
Private rates of return to primary and
university education averaged 13 and 11 percent,
but only 4 to 5 percent at the secondary and
vocational levels. Returns to higher education were
higher for females (12 percent) than for males
(10 percent) (Moock, Patrinos and Venkataraman
20032003). In 1993, the returns to schooling
were 4.3 percent (Nguyen 2004). In 1997 they were
4.7 percent, and slightly higher for women
(Liu 2006). In 1998 they were 4.8 percent (Nguyen
2004). Gallup (2002) found that returns to
education in Vietnam increased from 1993 to 1998.
In 1997, the returns to schooling were 2.6
percent, but when using IV, as high as 7.0 percent
(Arcand, d'Hombres and Gyselinck 2005). By
2002, they had reached 5.1 (Patrinos, Ridao-Cano
and Sakellariou 2009).

More recent studies have found greater returns to

higher levels of education. In relation to over
time estimates, Liu (2006), Pham and Reilly (2007)
and Oostendrop and Doan (2013) found the
returns to increase over the period 1998 to 2006
(Figure 1). However, Phan and Coxhead (2013)
reported that returns to education in Vietnam
declined between the periods 1993 to 2002 and
2002
to 2008. The mixed findings that have been derived
to date are most likely due to the employment
of different estimation techniques across the
various studies (e.g., Ordinary Least Squares versus
Instrumental Variables), along with differences in
the defined sample and control variables
included in the estimated models (Phu Viet Le
2014; Tien 2014; Sakellariou and Fang 2010;
Imbert
2010). Wigren and Nilsson (2015) estimate the
returns to schooling in 2012 at 9 percent. The male
and female education returns displayed a linear
pattern in both 2002 and 2010, with earnings rising
with increased levels of education. Relative to
males with no qualifications, the returns to those
with a vocational training qualification or below
fell between 2002 and 2010, while the economic
returns to a college education and above increased.
Similar results were observed for females
(McGuinness, Kelly, Thu and Thu 2015). Diep and
Coxhead 2016 also find rising returns but not
as high as in other studies. Returns soared in the
1990s but fell after the crisis (Doan, Tuyen and
Quan 2018).
 Figure 1: Returns to Schooling in
Vietnam since the early
1990s
12

10

0
1992 1997 2002 2007
2012
 Source: Annex 1

4
_x000C_The overall rate of return to schooling in
Vietnam at about 9 to 10 percent, is at the global
average.
It is higher than in most countries in the region,
demonstrating that further private investment in
education is a sound priority (Table 1). The returns
to primary schooling have decreased over
time, which is not surprising given the level of
achievement and universal access in Vietnam. The
returns to primary schooling are lower than the
regional average. The returns to secondary are
low, but not much lower than the regional average.
The returns to tertiary education are high,
significantly higher that the regional average, and
on par with China, the Philippines and Thailand.
In fact, the returns to tertiary education in Vietnam
are among the highest in the world.

Table 1: Returns to Schooling

(selected countries)
Economy Year Returns
Primary Secondary Tertiary
Australia 2010 13 14
20 4
Brazil 2012 11 8
6 17
Cambodia 2012 5 13
3 12
China 2002 17
9 21
Indonesia 2010 10 13
10 12
Japan 2007 14
9
Korea, Rep. 2010 13
13
Lao PDR 2008 5 11
5 6
Mongolia 2011 9 14
4 10
Philippines 2014 8 10
6 22
Russian Federation 2009 3
7
Singapore 1998 13 7
10 11
Thailand 2011 9 3
5 17
United States 2010 13
5 15
2010-
Vietnam 9-10 6.0
2-5 18-21
2014
Source: Montenegro and Patrinos 2014

Since the early 1990s, the returns to higher

education have increased significantly (Figure 2).
In
1992, the returns to primary were 10.8 percent,
secondary was 3.8 percent and tertiary 3.0 percent
(Moock, Patrinos and Venkataraman 20032003).
By 2008, the returns to tertiary had soared to 17
to 20 percent (Doan 2013; Montenegro and
Patrinos 2014). In 2010, the returns to primary
were
6.1, secondary 2.0, and tertiary was 17.8 percent
(McGuinness, Kelly, Thu and Thu 2015).
Thereafter, there seems to be a decline in the
relatively high returns to university (Doan, Tuyen
and Quan 2018), but it remains much higher than
other levels. Similar findings are presented in
Demombynes and Testaverde (2018).
5x000C_
Figure 2: Rising Returns to Higher Education in
Vietnam since 1992
20

15

10

0
Primary Secondary
Tertiary
1992 2010
Source: Annex 1

Private and Social Returns to Higher Education

The private returns to higher education are now

higher than the returns to primary schooling
(Montenegro and Patrinos 2014; see also
Colclough, Kingdon and Patrinos 2010). The
returns to
primary schooling are just above 10 percent and
returns to secondary schooling are 7 percent. The
private rate of return to university is 15 percent. It
is highest in Sub-Saharan Africa at 21 percent
and ranges between 10 (Europe and Central Asia)
and 17 percent (South Asia) for the rest.

High returns to higher education signal that

university is a good investment – especially for the
student and her family. If you add to that the social
benefits and costs of higher education, then
one can argue that higher education has social
returns as well. Financing higher education,
however, requires a sustainable financial model,
which in most countries entails smart cost-
recovery (via, for example, income contingent
student finance) and targeted support – which
means guidance, information, supports, not just
money – for those particularly disadvantaged.

How do we know that higher education might be a

justified expenditure on the part of students
(and their families) and society? Typically, we rely
on cost-benefit analysis that gives us an
estimate of the rate of return to investment in
higher education. The rate of return to schooling
equals the value of lifetime earnings of the
graduate to the net present value of the costs of
education. An economically justified investment
has a positive rate of return which is higher than
the alternative. For the prospective student,
assessing costs and benefits means investing until
the
rate of return exceeds the private discount rate (the
cost of borrowing and an allowance for risk).
The costs are the student’s foregone earnings while
studying, plus any fees or incidental expenses
incurred while attending classes. The private
benefits amount to how much extra money a
graduate
earns compared with someone with less education.
In the case of higher education, the comparison
is made with secondary school leavers.

The social rate of return is calculated by adding

society’s spending on higher education on the cost
side – for example, money spent on renting
buildings and professorial salaries – and the
benefits
6
_x000C_to society beyond wages. Ideally, the
social benefits should include non-monetary
benefits of education, such as improved health and
nutrition practices and inter-generational well-
being.
Given the scant empirical evidence on the social
benefits (Oreopoulos and Salvanes 2011; see also
McMahon 2004), estimates of the social rate of
return are typically based on observable monetary
costs and labor market earnings (Jimenez and
Patrinos 2008).

The returns to higher education have changed over

time. The returns to an additional year of
schooling tend to decline as the level of schooling
rises. But the returns have declined modestly
in past decades despite rising average years of
schooling. In 2010, the world population aged 15
and above is estimated to have had an average of 8
years of schooling, having increased steadily
from just over 5 years in 1980 (Barro and Lee
2013). While the enrollment rate in higher
education
grew significantly over time, the returns to higher
education remain high. This suggests that global
demand for skills has kept the returns to schooling
high. It is thus safe to say that education is a
good investment globally.

Vietnam is following the general case of increasing

returns to tertiary education. Analysis of the
social returns to schooling in Vietnam is limited.
Using published data on costs and wage
differentials by level in Nguyen (2004), we
estimate the social rate of return using the “short
cut”
method (Psacharopoulos 1995). The social rate of
return to schooling was very low in Vietnam in
1993, and just about 0 percent at the tertiary level.
By 1998, social returns had risen considerably,
and the highest returns were for tertiary education,
at 12 percent, compared to primary and
secondary, both at 5 percent.

Financial Implications

For the individual and her family, the good news is

that the returns to higher education remain
high. Higher education is a likely good investment
for people to consider. But decisions on
investing should be based on full information about
the costs and benefits for an individual student,
as well as full information on the course of study.
Enrolling in higher education will not lead to
higher earnings if the student is in the wrong school
or faculty or discipline based on their own
interests and capabilities.

For society, better educated citizens and workers

are more productive and impart social benefits.
However, before committing to increases in
funding, governments would be wise to plant
incentives for the efficient and equitable use of
funds. This might mean selective fees near the
social cost of higher education. Expanding
opportunities could also mean student finance
options,
but given the experience with traditional student
loans, options to tap future earnings to finance
current education (e.g., income contingent loans
and human capital contracts) might be considered.
Given the high private returns to tertiary education,
it is right to expect a greater private
contribution. In low-income countries, returns on
investment reach 22.8 percent per additional year
(Education Commission 2016).

7
_x000C_Conclusions

Education is central to the long-term development

of human capital and to economic growth.
Schooling empowers people and strengthens
nations. It affirms human dignity and provides
individuals with capabilities to compete in the
global economy. Good-quality education is among
the most powerful instruments known to reduce
poverty and inequality and to foster dynamic and
competitive economies over the long term. In
today’s global economy, a high-quality education is
critically important for creating, applying and
disseminating knowledge.

Globally, the social rate of return to education is 10

percent in low-income and 7 percent in middle-
income economies. These returns to education are
well above average returns to investment in
stocks (4.6 percent), bank deposits (4.6 percent),
housing (2.8 percent), and long-term bonds (2.7
percent). Evidence from advanced economies also
shows that improving quality and learning
outcomes, in addition to years of schooling,
delivers even greater benefits than improving
enrollment alone.
The private rate of return to schooling in Vietnam
is at the global average. It is higher than in most
countries in the region, demonstrating that further
investment in education is a sound priority. The
returns to primary schooling have decreased over
time, which is not surprising given the level of
achievement and universal access in Vietnam. The
returns to primary schooling are lower than
the regional average. The returns to secondary are
low, but not much lower than the regional
average. The returns to tertiary education are high,
significantly higher that the regional average,
and on par with China, the Philippines and
Thailand. In fact, the returns to tertiary education in
Vietnam are among the highest in the world. This
reflects economic policy outcomes and the long-
standing tradition of valuing education in Vietnam.
Vietnam can continue to expand upper secondary
and post-secondary education given the high
returns to tertiary education. Given the relatively
high private and social returns to higher
education, some level of cost-recovery is warranted.
Care should be taken to expand higher
education equitably and sustainably, and to
improving quality. Given the rising returns despite
rapid increases in schooling levels suggests the
demand for skills is rising. Investment should
rapidly expand quality secondary and higher
education. The high quality of basic education and
the universal coverage at this level suggests more
resources should go into post basic education.
This includes higher education but also universal
coverage of upper secondary schooling to make
it possible for more students to enter university.
Given the high returns to education in Vietnam
and globally, which surpass the returns to other
viable investments, then expanding education
spending – by family and society – makes
economic sense.

Most of the data reviewed here go to 2012. More

recent data and analysis are needed. The returns
to schooling should be analyzed with controls for
endogeneity. One idea would be to use the
introduction of compulsory schooling in 1991 as an
instrument (Dang 2017).

Since most of the research thus far in Vietnam has

produced estimates of private returns to
schooling, then it would make sense to estimate
social returns. This could be done in combination
with work on appropriate levels of cost-recovery
and financing mechanisms. Future research
should also look at the impact of raising the level
of cost-recovery at the university level. More
8
_x000C_research is also needed on the returns to
quality in Vietnam, at the secondary and tertiary
levels.
Future analysis should focus on more recent data
and consider labor market conditions.

9
_x000C_References

Arcand, J., B. d'Hombres and P. Gyselinck. 2005.

“Instrument Choice and the Returns to
Education: New Evidence from Vietnam.”
Revue économique 56(3): 563-572.
Barro, R.J. and J.W. Lee. “A New Data Set of
Educational Attainment in the World, 1950-2010.”
 Journal of Development Economics 104: 184-
198.
Colclough, C., G. Kingdon and H. Patrinos. 2010.
“The Changing Pattern of Wage Returns to
Education and its Implications.” Development
Policy Review 28(6): 733-747.
Dang, Thang. 2017. “Education as Protection? The
Effect of Schooling on Non-Wage
Compensation in a Developing Country.”
University Library of Munich, Germany.
Demombynes, G. and M. Testaverde. 2018.
“Employment structure and returns to skill in
Vietnam: estimates using the labor force
survey.” World Bank Policy Research working
paper no. WPS 8364. Washington, D.C.
Diep, P. and Coxhead, I., 2016. “Globalization,
Wages and Skill Premia in a Transition
Economy: New Evidence from Vietnam.”
Department of Agricultural and Resource
 Economics, UC-Davis.
Doan, T., Tuyen, T.Q. and Quan, L., 2018. Lost in
Transition? Declining Returns to Education in
Vietnam The European Journal of
Development Research 30(2): 195-216.
Doan, T.T. and P. Stevens. 2011. “Labour Market
Returns to Higher Education in Vietnam.”
Economics: The Open-Access, Open-
Assessment E-Journal 5(12): 1–21.
Doan, T. and J. Gibson. 2009. “Do Returns to
Schooling Go Up during Transition? The Not So
Contrary Case of Vietnam.” Working papers in
economics no. 09/08, University of
Waikato, Department of Economics.
Doan, T., and J. Gibson, 2010. “Return to
Schooling in Vietnam during Economic Transition:
Does the Return Reach its Peak?” MPRA
Paper #24984, Economics Department,
University of Waikato.
Doan, T. and J. Gibson. 2012. “Return to Education
in Vietnam during the Recent
Transformation.” International Journal of
Education Economics and Development 3(4):
314-329.
Gallup, J.L. 2002. “The Wage Labor Market and
Inequality in Viet Nam in the 1990s.” World
Bank Policy Research Working Paper No.
2896.
Imbert, C., 2010. “Decomposing Wage Inequality:
Public and Private Sectors in Vietnam 1993-
2006.”
Jimenez, E. and H.A. Patrinos. 2008. “Can Cost-
Benefit Analysis Guide Education Policy in
Developing Countries?” World Bank Policy
Research Working Paper No. 4568.
Le, P.V., 2015. More Schooling Is Not Always
Better: Evidence from an Instrumental Variables
Approach to Educational Reform in Vietnam.
Liu, A.Y.C. 2006. “Changing Wage Structure and
Education in Vietnam 1993-1998: The Roles of
Demand.” Economics of Transition 14(4): 681-
706.
McGuinness, S., E. Kelly, P. Pham Thi Thu and T.
Ha Thi Thu. 2015. “Returns to Education and
the Demand for Labour in Vietnam.”
Economic and Social Research Institute (ESRI) No.
WP506.
McMahon, W.W. 2004. “The Social and External
Benefits of Education.” International Handbook
on the Economics of Education. G. Johnes and
J. Johnes (ed). Cheltenham, Edward Elgar:
pp211-259.

10
_x000C_Montenegro, C. and H.A. Patrinos. 2014.
“Comparable Estimates of Returns to Schooling
around
 the World. World Bank Policy Research
Working Paper Series 7020.
Moock, P.R., H.A. Patrinos and M. Venkataraman.
2003. “Education and Earnings in a Transition
Economy: The Case of Vietnam.” Economics
of Education Review 22: 503-510.
World Bank. 2017. Vietnam Public Expenditure
Review (Vol. 2): Fiscal Policies towards
Sustainability, Efficiency, and Equity.
Washington, D.C.: World Bank Group.
Nguyen, N.N., 2004. “Trends in the Education
Sector.” Economic Growth, Poverty, and
Household Welfare in Vietnam. P. Glewwe, N.
Agrawal and D. Dollar (eds.). Economic
Growth, Poverty, and Household Welfare in
Vietnam (Washington DC: World Bank),
pp.425-66.
Oostendrop, R.H and Q.H. Doan. 2013. “Have the
Returns to Education Really Increased in
 Vietnam? Wage versus Employment Effect.”
Journal of Comparative Economics 41: 923-
938.
Oreopoulos, P. and K.G. Salvanes. 2011. “Priceless:
The Nonpecuniary Benefits of Schooling.”
Journal of Economic Perspectives 25(1): 159-
184.
Patrinos, H.A. 2016. “Estimating the Return to
Schooling using the Mincer Equation.” IZA World
of Labor, Institute for the Study of Labor
(IZA), pages 278-278.
Patrinos, H.A., C. Ridao-Cano and C. Sakellariou.
2009. “A Note on Schooling and Wage
Inequality in the Public and Private Sector.”
Empirical Economics 37(2): 383-392.
Pham, H.T. and B. Reilly. 2007. “The Gender Pay
Gap in Vietnam, 1993-2002: A Quintile
Regression Approach.” Journal of Asian
Economics 185(5): 775-806.
Phan, D. and I. Coxhead, 2013. “Long-run Costs of
Piecemeal Reform: Wage Inequality and
Returns to Education in Vietnam.” Journal of
Comparative Economics 41(4): 1106-22.
Psacharopoulos, G. 1995. “The Profitability of
Investment in Education: Concepts and
Methods.” Human capital development and
operations policy working papers No. HCO
63. Washington, DC: World Bank.
Psacharopoulos, G. and H.A. Patrinos. 2018.
“Returns to investment in education: a decennial
review of the global literature.” Education
Economics 26(5): 445-458.
Sakellariou, C. and Z. Fang. 2010. “After the
Reforms: Determinants of Wage Growth and
Changes in Wage Inequality in Vietnam 1998-
2008.” Working Paper #1020/06, Economic
Growth Centre, Division of Economics,
Nanyang Technological University.
Stroup, R.H. and M.B. Hargrove. 1969. “Earnings
and Education in Rural South Vietnam.”
Journal of Human Resources 4(2): 215-225.
Tien, N.D., 2014. An Analysis of Labour Market
Returns to Education in Vietnam: Evidence from
the National Labour Force Survey 2012.
International Training Centre of the International
Labour Organization Working Paper, 3.
Wigren, E. and L. Nilsson. 2015. “The Impact of
Human Capital on Earnings: A Study Regarding
urban Vietnam.” Linnaeus University, Sweden.

11
_x000C_ Annex 1:
Returns to Schooling in Vietnam over Time
Year Returns Primary Secondary Tertiary
Primary Secondary Tertiary Primary
Secondary Tertiary Source
Total Total Total Male
Male Male Female Female Female
1964 17.0
Stroup and Hargrove 1969
1992 4.8 10.8 3.8 3.0
Moock, Patrinos and Venkataraman 20032003
1993 4.3 5.0 4.4
Nguyen 2004
1997 4.7
Liu 2006
1998 4.8
Nguyen 2004
2002 5.1
Patrinos, Ridao-Cano and Sakellariou 2009
2004 8.4
Doan and Stevens 2011
2006 8.7 2.7 5.3 18.4 1.6 4.1
18.8 3.3 7.6 17.8 Montenegro and
Patrinos 2014
2008 10.0 5.6 20.5 4.4
20.4 8.1 21.4 Montenegro and
Patrinos 2014
2010 5.2 6.1 2.0 17.8 7.5 2.6
11.2 7.7 4.4 11.7 Montenegro and
Patrinos 2014; McGuinness et al 2015
2012 9.0
Wigren and Nilsson 2015
2014 5.7
Doan and Stevens 2011

12
The Economic Case for Education in Vietnam1
Harry Anthony Patrinos World Bank Pham Vu
Thang VNU University of Economics and Business
Nguyen Duc Thanh Viet Nam Institute for
Economic and Policy Research (VEPR), VNU
University of Economics and Business Keywords:
Returns to education; Vietnam; Schooling JEL
codes: J24 J31 C83 1 Thanks to Michael Crawford,
Ousmane Dione, Nguyen Hoang Hai, Amer Hasan,
Keiko Inoue, Dilip Parajuli, George
Psacharopoulos, Chris Sakellariou, Dung Kieu Vo
and Michel Welmond for helpful comments. 2
Introduction Education is positively related to
economic growth. In addition, education is
important in determining lifetime returns of
individuals. Economists use the Mincer (1974)
equation to explain (and estimate) employment
earnings as a function of schooling and labor
market experience. The equation provides
estimates of the average monetary private returns
of additional education. This information is
important for policy makers who must decide on
education spending, prioritization of schooling
levels, and education financing programs such as
student loans. Research suggests that each
additional year of education produces a private
(i.e., individual) rate of return to schooling of about
10 percent per year. Estimates range from a low of
1 percent to more than 20 percent in some countries
(Montenegro and Patrinos 2014; Patrinos 2016).
Globally, the returns to tertiary education are
highest, followed by primary and then secondary
schooling; this represents a significant reversal
from many studies’ prior results (Psacharopoulos
and Patrinos 2018). The returns are highest in Sub-
Saharan Africa and globally higher for women than
for men. Policy makers can learn much from these
estimates. For example, further expansion of
university education appears to be very worthwhile
for the individual, meaning that governments need
to find ways to make financing more readily
available, and that high rates of return are found
through investment in girls’ education. A dollar
invested in a one-year increase in the mean years of
schooling generates more than $5 in additional
gross earnings in low-income countries and $2.5 in
lower-middle income countries (Education
Commission 2016). This is the case even after
considering the costs incurred by governments and
individuals and the current variability in education
quality across countries. This is equivalent to a rate
of return of 10 percent and 7 percent. Vietnam has
made significant progress. In this review of the
research on the returns to education in Vietnam we
find that the overall private rate of return to
schooling in Vietnam is at the global average but
higher than in most countries in the region,
demonstrating that further investment in education
is a sound priority. Returns to primary and
secondary education have declined over time and
are lower than the regional average. The returns to
secondary are low, but not much lower than the
regional average. The returns to tertiary education
are high, and have increased considerably, and are
about 20 percent. Investing in higher education,
therefore, makes sense for the individual and her
family. Education is central to the long-term
development of human capital and to economic
growth. Vietnam can continue to expand upper
secondary and post-secondary education given the
high returns to tertiary education. Given the
relatively high private and social returns to higher
education, some level of cost-recovery is
warranted. Care should be taken to expand higher
education equitably and sustainably, and to
improving quality. However, most of the data
reviewed here goes to 2012. Going forward, more
recent data and analysis are needed. The Case of
Vietnam Major economic reforms in Vietnam since
1986 have included several measures to liberalize
the labor market. Salary reforms were introduced in
1993. In 1995, a labor law was passed, and a labor
code was published that covers a wide range of
labor issues including labor contracts, collective
bargaining, social insurance, working conditions
and training. Labor market adjustments occurred 3
during and after the East Asia economic and
financial crisis of 1997 to 1999. The period 2002 to
2010 saw several revisions to Vietnam’s Labor
Codes to implement international regulations and
to better protect the rights of both employees and
employers. Prior to 2006, the state had one general
minimum wage that applied throughout the
country. However, since 2007 there are FDI firm
and non-FDI firm minimum wage rates, which vary
per the region that the firm operates in. There are
four defined regions, which are classified per a
socio-economic standards index. Thus, there are
eight minimum wages, which cannot be less than
the state’s general minimum wage. The general
minimum wage is mostly applied to state sector
employees. Vietnam has made significant progress
in education in terms of access and quality. The
country has achieved universal preschool education
for five-year-old children and primary education
and is working towards achieving universal lower
secondary education. Vietnam has achieved high
levels of student learning. Per the recently
published Program for International Student
Assessment (PISA), Vietnam surpasses the OECD
country average and many developed economies
and places in the top 10 overall in science
achievement. The 2015 PISA, with its focus on
science, was no exception. Vietnam was clearly in
the top 10 worldwide in science. This bodes well
for preparing students for the world of work with
the 21st century skills they need to succeed.
Science and technology are fundamental to
people’s futures. Moving forward, the priority is to
focus on higher levels of schooling. However, the
current higher education financing mechanism falls
short. It fails to provide incentives for higher
education institutions to improve quality and
relevance to respond to labor market demand
(World Bank 2017). The Higher Education Law of
2012 provides the legal basis for substantial reform
in governance and financial mechanisms, but the
required decrees and other elements of the
normative framework need to be developed. There
has been rapid expansion of enrollments in both
public and private higher education institutions.
The higher education budget will not be able to
absorb the whole cost, which will require some
level of “cost-sharing” going forward. Higher
education financing needs to prioritize, promote
competition, ensure education equity (or support
disadvantaged students), encourage the
internationalization of universities, and generate
performance-orientation to incentivize higher
education institutions to improve quality and
relevance. Higher education financing needs to
move towards better prioritization of public
resources towards areas with high social returns.
Higher education needs urgent attention to meet the
demands for high-quality human resources.
Enrollment in higher education has doubled
roughly every five years over the last several
decades but the policies of education finance,
namely, tuition fee, public financing and private
sector contribution have not been reformed
efficiently, pushing higher education to the race of
low quality and low cost. Graduates lack the skills
required by employers. Research institutes and
universities provide too little research, and what is
produced is mostly not of sufficient quality and
relevance for the economy’s needs. The
government has been providing more autonomy to
some key institutions and universities, setting up an
accreditation system and raising the tuition fee
ceiling for the period of 5 years. Perhaps the first
study of the benefits of education in Vietnam
appeared almost 50 years ago (Stroup and
Hargrove 1969). In an analysis limited to rural
South Vietnam in 1964, another year 4 of schooling
increased earnings by 17 percent. In 1992, on
average, the estimates of rates of return to
schooling were relatively low, at about 5 percent.
Private rates of return to primary and university
education averaged 13 and 11 percent, but only 4 to
5 percent at the secondary and vocational levels.
Returns to higher education were higher for
females (12 percent) than for males (10 percent)
(Moock, Patrinos and Venkataraman 20032003). In
1993, the returns to schooling were 4.3 percent
(Nguyen 2004). In 1997 they were 4.7 percent, and
slightly higher for women (Liu 2006). In 1998 they
were 4.8 percent (Nguyen 2004). Gallup (2002)
found that returns to education in Vietnam
increased from 1993 to 1998. In 1997, the returns
to schooling were 2.6 percent, but when using IV,
as high as 7.0 percent (Arcand, d'Hombres and
Gyselinck 2005). By 2002, they had reached 5.1
(Patrinos, Ridao-Cano and Sakellariou 2009). More
recent studies have found greater returns to higher
levels of education. In relation to over time
estimates, Liu (2006), Pham and Reilly (2007) and
Oostendrop and Doan (2013) found the returns to
increase over the period 1998 to 2006 (Figure 1).
However, Phan and Coxhead (2013) reported that
returns to education in Vietnam declined between
the periods 1993 to 2002 and 2002 to 2008. The
mixed findings that have been derived to date are
most likely due to the employment of different
estimation techniques across the various studies
(e.g., Ordinary Least Squares versus Instrumental
Variables), along with differences in the defined
sample and control variables included in the
estimated models (Phu Viet Le 2014; Tien 2014;
Sakellariou and Fang 2010; Imbert 2010). Wigren
and Nilsson (2015) estimate the returns to
schooling in 2012 at 9 percent. The male and
female education returns displayed a linear pattern
in both 2002 and 2010, with earnings rising with
increased levels of education. Relative to males
with no qualifications, the returns to those with a
vocational training qualification or below fell
between 2002 and 2010, while the economic
returns to a college education and above increased.
Similar results were observed for females
(McGuinness, Kelly, Thu and Thu 2015). Diep and
Coxhead 2016 also find rising returns but not as
high as in other studies. Returns soared in the
1990s but fell after the crisis (Doan, Tuyen and
Quan 2018). Source: Annex 1 0 2 4 6 8 10 12 1992
1997 2002 2007 2012 Figure 1: Returns to
Schooling in Vietnam since the early 1990s 5 The
overall rate of return to schooling in Vietnam at
about 9 to 10 percent, is at the global average. It is
higher than in most countries in the region,
demonstrating that further private investment in
education is a sound priority (Table 1). The returns
to primary schooling have decreased over time,
which is not surprising given the level of
achievement and universal access in Vietnam. The
returns to primary schooling are lower than the
regional average. The returns to secondary are low,
but not much lower than the regional average. The
returns to tertiary education are high, significantly
higher that the regional average, and on par with
China, the Philippines and Thailand. In fact, the
returns to tertiary education in Vietnam are among
the highest in the world. Table 1: Returns to
Schooling (selected countries) Economy Year
Returns Primary Secondary Tertiary Australia 2010
13 14 20 4 Brazil 2012 11 8 6 17 Cambodia 2012 5
13 3 12 China 2002 17 9 21 Indonesia 2010 10 13
10 12 Japan 2007 14 9 Korea, Rep. 2010 13 13 Lao
PDR 2008 5 11 5 6 Mongolia 2011 9 14 4 10
Philippines 2014 8 10 6 22 Russian Federation
2009 3 7 Singapore 1998 13 7 10 11 Thailand 2011
9 3 5 17 United States 2010 13 5 15 Vietnam 2010-
2014 9-10 6.0 2-5 18-21 Source: Montenegro and
Patrinos 2014 Since the early 1990s, the returns to
higher education have increased significantly
(Figure 2). In 1992, the returns to primary were
10.8 percent, secondary was 3.8 percent and
tertiary 3.0 percent (Moock, Patrinos and
Venkataraman 20032003). By 2008, the returns to
tertiary had soared to 17 to 20 percent (Doan 2013;
Montenegro and Patrinos 2014). In 2010, the
returns to primary were 6.1, secondary 2.0, and
tertiary was 17.8 percent (McGuinness, Kelly, Thu
and Thu 2015). Thereafter, there seems to be a
decline in the relatively high returns to university
(Doan, Tuyen and Quan 2018), but it remains much
higher than other levels. Similar findings are
presented in Demombynes and Testaverde (2018).
6 Source: Annex 1 Private and Social Returns to
Higher Education The private returns to higher
education are now higher than the returns to
primary schooling (Montenegro and Patrinos 2014;
see also Colclough, Kingdon and Patrinos 2010).
The returns to primary schooling are just above 10
percent and returns to secondary schooling are 7
percent. The private rate of return to university is
15 percent. It is highest in Sub-Saharan Africa at
21 percent and ranges between 10 (Europe and
Central Asia) and 17 percent (South Asia) for the
rest. High returns to higher education signal that
university is a good investment – especially for the
student and her family. If you add to that the social
benefits and costs of higher education, then one can
argue that higher education has social returns as
well. Financing higher education, however,
requires a sustainable financial model, which in
most countries entails smart costrecovery (via, for
example, income contingent student finance) and
targeted support – which means guidance,
information, supports, not just money – for those
particularly disadvantaged. How do we know that
higher education might be a justified expenditure
on the part of students (and their families) and
society? Typically, we rely on cost-benefit analysis
that gives us an estimate of the rate of return to
investment in higher education. The rate of return
to schooling equals the value of lifetime earnings
of the graduate to the net present value of the costs
of education. An economically justified investment
has a positive rate of return which is higher than
the alternative. For the prospective student,
assessing costs and benefits means investing until
the rate of return exceeds the private discount rate
(the cost of borrowing and an allowance for risk).
The costs are the student’s foregone earnings while
studying, plus any fees or incidental expenses
incurred while attending classes. The private
benefits amount to how much extra money a
graduate earns compared with someone with less
education. In the case of higher education, the
comparison is made with secondary school leavers.
The social rate of return is calculated by adding
society’s spending on higher education on the cost
side – for example, money spent on renting
buildings and professorial salaries – and the
benefits 0 5 10 15 20 Primary Secondary Tertiary
Figure 2: Rising Returns to Higher Education in
Vietnam since 1992 1992 2010 7 to society beyond
wages. Ideally, the social benefits should include
non-monetary benefits of education, such as
improved health and nutrition practices and inter-
generational well-being. Given the scant empirical
evidence on the social benefits (Oreopoulos and
Salvanes 2011; see also McMahon 2004), estimates
of the social rate of return are typically based on
observable monetary costs and labor market
earnings (Jimenez and Patrinos 2008). The returns
to higher education have changed over time. The
returns to an additional year of schooling tend to
decline as the level of schooling rises. But the
returns have declined modestly in past decades
despite rising average years of schooling. In 2010,
the world population aged 15 and above is
estimated to have had an average of 8 years of
schooling, having increased steadily from just over
5 years in 1980 (Barro and Lee 2013). While the
enrollment rate in higher education grew
significantly over time, the returns to higher
education remain high. This suggests that global
demand for skills has kept the returns to schooling
high. It is thus safe to say that education is a good
investment globally. Vietnam is following the
general case of increasing returns to tertiary
education. Analysis of the social returns to
schooling in Vietnam is limited. Using published
data on costs and wage differentials by level in
Nguyen (2004), we estimate the social rate of
return using the “short cut” method
(Psacharopoulos 1995). The social rate of return to
schooling was very low in Vietnam in 1993, and
just about 0 percent at the tertiary level. By 1998,
social returns had risen considerably, and the
highest returns were for tertiary education, at 12
percent, compared to primary and secondary, both
at 5 percent. Financial Implications For the
individual and her family, the good news is that the
returns to higher education remain high. Higher
education is a likely good investment for people to
consider. But decisions on investing should be
based on full information about the costs and
benefits for an individual student, as well as full
information on the course of study. Enrolling in
higher education will not lead to higher earnings if
the student is in the wrong school or faculty or
discipline based on their own interests and
capabilities. For society, better educated citizens
and workers are more productive and impart social
benefits. However, before committing to increases
in funding, governments would be wise to plant
incentives for the efficient and equitable use of
funds. This might mean selective fees near the
social cost of higher education. Expanding
opportunities could also mean student finance
options, but given the experience with traditional
student loans, options to tap future earnings to
finance current education (e.g., income contingent
loans and human capital contracts) might be
considered. Given the high private returns to
tertiary education, it is right to expect a greater
private contribution. In low-income countries,
returns on investment reach 22.8 percent per
additional year (Education Commission 2016). 8
Conclusions Education is central to the long-term
development of human capital and to economic
growth. Schooling empowers people and
strengthens nations. It affirms human dignity and
provides individuals with capabilities to compete in
the global economy. Good-quality education is
among the most powerful instruments known to
reduce poverty and inequality and to foster
dynamic and competitive economies over the long
term. In today’s global economy, a high-quality
education is critically important for creating,
applying and disseminating knowledge. Globally,
the social rate of return to education is 10 percent
in low-income and 7 percent in middleincome
economies. These returns to education are well
above average returns to investment in stocks (4.6
percent), bank deposits (4.6 percent), housing (2.8
percent), and long-term bonds (2.7 percent).
Evidence from advanced economies also shows
that improving quality and learning outcomes, in
addition to years of schooling, delivers even greater
benefits than improving enrollment alone. The
private rate of return to schooling in Vietnam is at
the global average. It is higher than in most
countries in the region, demonstrating that further
investment in education is a sound priority. The
returns to primary schooling have decreased over
time, which is not surprising given the level of
achievement and universal access in Vietnam. The
returns to primary schooling are lower than the
regional average. The returns to secondary are low,
but not much lower than the regional average. The
returns to tertiary education are high, significantly
higher that the regional average, and on par with
China, the Philippines and Thailand. In fact, the
returns to tertiary education in Vietnam are among
the highest in the world. This reflects economic
policy outcomes and the longstanding tradition of
valuing education in Vietnam. Vietnam can
continue to expand upper secondary and post-
secondary education given the high returns to
tertiary education. Given the relatively high private
and social returns to higher education, some level
of cost-recovery is warranted. Care should be taken
to expand higher education equitably and
sustainably, and to improving quality. Given the
rising returns despite rapid increases in schooling
levels suggests the demand for skills is rising.
Investment should rapidly expand quality
secondary and higher education. The high quality
of basic education and the universal coverage at
this level suggests more resources should go into
post basic education. This includes higher
education but also universal coverage of upper
secondary schooling to make it possible for more
students to enter university. Given the high returns
to education in Vietnam and globally, which
surpass the returns to other viable investments, then
expanding education spending – by family and
society – makes economic sense. Most of the data
reviewed here go to 2012. More recent data and
analysis are needed. The returns to schooling
should be analyzed with controls for endogeneity.
One idea would be to use the introduction of
compulsory schooling in 1991 as an instrument
(Dang 2017). Since most of the research thus far in
Vietnam has produced estimates of private returns
to schooling, then it would make sense to estimate
social returns. This could be done in combination
with work on appropriate levels of cost-recovery
and financing mechanisms. Future research should
also look at the impact of raising the level of cost-
recovery at the university level. More 9 research is
also needed on the returns to quality in Vietnam, at
the secondary and tertiary levels. Future analysis
should focus on more recent data and consider
labor market conditions. 10 References Arcand, J.,
B. d'Hombres and P. Gyselinck. 2005. “Instrument
Choice and the Returns to Education: New
Evidence from Vietnam.” Revue économique
56(3): 563-572. Barro, R.J. and J.W. Lee. “A New
Data Set of Educational Attainment in the World,
1950-2010.” Journal of Development Economics
104: 184-198. Colclough, C., G. Kingdon and H.
Patrinos. 2010. “The Changing Pattern of Wage
Returns to Education and its Implications.”
Development Policy Review 28(6): 733-747. Dang,
Thang. 2017. “Education as Protection? The Effect
of Schooling on Non-Wage Compensation in a
Developing Country.” University Library of
Munich, Germany. Demombynes, G. and M.
Testaverde. 2018. “Employment structure and
returns to skill in Vietnam: estimates using the
labor force survey.” World Bank Policy Research
working paper no. WPS 8364. Washington, D.C.
Diep, P. and Coxhead, I., 2016. “Globalization,
Wages and Skill Premia in a Transition Economy:
New Evidence from Vietnam.” Department of
Agricultural and Resource Economics, UC-Davis.
Doan, T., Tuyen, T.Q. and Quan, L., 2018. Lost in
Transition? Declining Returns to Education in
Vietnam The European Journal of Development
Research 30(2): 195-216. Doan, T.T. and P.
Stevens. 2011. “Labour Market Returns to Higher
Education in Vietnam.” Economics: The Open-
Access, Open-Assessment E-Journal 5(12): 1–21.
Doan, T. and J. Gibson. 2009. “Do Returns to
Schooling Go Up during Transition? The Not So
Contrary Case of Vietnam.” Working papers in
economics no. 09/08, University of Waikato,
Department of Economics. Doan, T., and J. Gibson,
2010. “Return to Schooling in Vietnam during
Economic Transition: Does the Return Reach its
Peak?” MPRA Paper #24984, Economics
Department, University of Waikato. Doan, T. and
J. Gibson. 2012. “Return to Education in Vietnam
during the Recent Transformation.” International
Journal of Education Economics and Development
3(4): 314-329. Gallup, J.L. 2002. “The Wage Labor
Market and Inequality in Viet Nam in the 1990s.”
World Bank Policy Research Working Paper No.
2896. Imbert, C., 2010. “Decomposing Wage
Inequality: Public and Private Sectors in Vietnam
1993- 2006.” Jimenez, E. and H.A. Patrinos. 2008.
“Can Cost-Benefit Analysis Guide Education
Policy in Developing Countries?” World Bank
Policy Research Working Paper No. 4568. Le,
P.V., 2015. More Schooling Is Not Always Better:
Evidence from an Instrumental Variables Approach
to Educational Reform in Vietnam. Liu, A.Y.C.
2006. “Changing Wage Structure and Education in
Vietnam 1993-1998: The Roles of Demand.”
Economics of Transition 14(4): 681-706.
McGuinness, S., E. Kelly, P. Pham Thi Thu and T.
Ha Thi Thu. 2015. “Returns to Education and the
Demand for Labour in Vietnam.” Economic and
Social Research Institute (ESRI) No. WP506.
McMahon, W.W. 2004. “The Social and External
Benefits of Education.” International Handbook on
the Economics of Education. G. Johnes and J.
Johnes (ed). Cheltenham, Edward Elgar: pp211-
259. 11 Montenegro, C. and H.A. Patrinos. 2014.
“Comparable Estimates of Returns to Schooling
around the World. World Bank Policy Research
Working Paper Series 7020. Moock, P.R., H.A.
Patrinos and M. Venkataraman. 2003. “Education
and Earnings in a Transition Economy: The Case
of Vietnam.” Economics of Education Review 22:
503-510. World Bank. 2017. Vietnam Public
Expenditure Review (Vol. 2): Fiscal Policies
towards Sustainability, Efficiency, and Equity.
Washington, D.C.: World Bank Group. Nguyen,
N.N., 2004. “Trends in the Education Sector.”
Economic Growth, Poverty, and Household
Welfare in Vietnam. P. Glewwe, N. Agrawal and
D. Dollar (eds.). Economic Growth, Poverty, and
Household Welfare in Vietnam (Washington DC:
World Bank), pp.425-66. Oostendrop, R.H and
Q.H. Doan. 2013. “Have the Returns to Education
Really Increased in Vietnam? Wage versus
Employment Effect.” Journal of Comparative

Economics 41: 923- 938. Oreopoulos, P. and K.G.

Salvanes. 2011. “Priceless: The Nonpecuniary
Benefits of Schooling.” Journal of Economic
Perspectives 25(1): 159-184. Patrinos, H.A. 2016.
“Estimating the Return to Schooling using the
Mincer Equation.” IZA World of Labor, Institute
for the Study of Labor (IZA), pages 278-278.
Patrinos, H.A., C. Ridao-Cano and C. Sakellariou.
2009. “A Note on Schooling and Wage Inequality
in the Public and Private Sector.” Empirical
Economics 37(2): 383-392. Pham, H.T. and B.
Reilly. 2007. “The Gender Pay Gap in Vietnam,
1993-2002: A Quintile Regression Approach.”
Journal of Asian Economics 185(5): 775-806.
Phan, D. and I. Coxhead, 2013. “Long-run Costs of
Piecemeal Reform: Wage Inequality and Returns to
Education in Vietnam.” Journal of Comparative
Economics 41(4): 1106-22. Psacharopoulos, G.
1995. “The Profitability of Investment in
Education: Concepts and Methods.” Human capital
development and operations

Transforming higher education in Vietnam

Nita Temmerman 01 February 2019

Share

Vietnam is a rapidly growing and dynamic country

with a relatively young population. It has seen a
remarkable increase in the number of students
entering higher education in the past 20 or so
years.

The Vietnam government has also responded to the

need to meet the employment demands of various
industries and professions by increasing funding
for education. This has seen an expansion in the
number of vocational education and training (VET)
providers as well as universities to meet the
pressure for skilled workers, especially in areas
such as information and communications
technology (ICT), tourism and healthcare.

However, there is still some way to go before

Vietnam’s education system can be said to truly
provide what is required to meet the country’s
emerging economic and social demands.

Higher education in Vietnam includes specialised

colleges, teacher training colleges, public and
private universities as well as institutions governed
by cooperatives that are wholly funded through
tuition fees.

In the past 10 or so years, there has been significant

growth in the number of private for-profit higher
education institutions that tend to specialise in
niche demand fields, such as accounting and ICT.
Some of these are undeniably of lower academic
quality.
To date, no Vietnamese universities are ranked in
the world’s top 1,000 universities (based on well-
known world university rankings). The regulatory
environment is highly bureaucratic and centralised
through the Ministry of Education and Training
(MOET), which has authority over education,
including higher education.

MOET decides education policy and

implementation expectations that extend to rules
about student admissions as well as what is
included in the taught curriculum and the setting of
textbooks. MOET is gradually handing more
independence to higher education institutions.
However, progress to date remains rather gradual.

Curriculum reform

The curriculum delivered, on the whole, does not

adequately prepare graduates with the
competencies or attributes required by employers.
It is a curriculum that emphasises rote
memorisation, is textbook-centric and comprises
incessant assessments and high-stake
examinations.

Many VET and university courses do not feature

work-based learning opportunities or industry
placements, so omit valuable, actual practical
experience from students’ learning.

Approximately only 30%-35% of students are

admitted into higher education, which occurs via
students passing very demanding exams. Private
conversations with university officials reveal that
parents desperate for their son or daughter to gain
entry to a university offer bribes to university
administrators to ensure admission.

However, the government is acutely aware of the

need to make some essential changes to its
education system, including the reliance currently
placed on examinations as the key measure of
students’ aptitude, and so bring it more in line with
practices in other developed countries.

Accreditation

One major government reform is the establishment

of a National Accreditation Council, under the
umbrella of MOET, which oversees the
accreditation process higher education institutions
must undergo. The latter is based on an extensive
institutional self-assessment with clearly spelt out
criteria provided by MOET, as well as an external
audit that leads to accreditation for five years.

Accreditation is compulsory for all higher

education institutions in Vietnam and it is also
mandatory for them to have their own internal
quality assurance unit. It has only been in the past
couple of years that an eight-level National
Qualifications Framework (NQF) developed by
MOET has been implemented, bringing Vietnam in
line with many other countries that have had such a
framework in place for many years.

The NQF provides guidance to higher education

about the expected standard of student learning
outcomes at different levels of education, from
certificate (Levels 1-3) through to doctorate (Level
8).

The NQF is aimed, amongst other things, at

standardising the level and quality of what is
offered or delivered to students and at improving
international recognition of Vietnamese
qualifications to facilitate transferability of these
qualifications for student educational mobility.

Teacher quality

One of the key objectives included in the

government’s reform plan for higher education is to
improve the teaching quality of academics
employed in higher education. A goal set by the
government is that all academics will be at least
masters- and preferably doctoral-qualified by
2020.

However, it remains a considerable challenge for

Vietnamese universities to recruit qualified
academics and this is not helped by the relatively
poor salaries they receive and by the more highly
qualified ones being able to secure much more
highly paid employment in industry.

Perhaps the biggest challenge of all, however,

continues to be the need for real change to occur in
the teaching-learning approach used.

I have been involved in consultancy work with a

number of universities in Vietnam on a regular
basis over the past six years. In that time, I have
heard about and seen some of the government
reforms to higher education being implemented. It
is fair to say that work towards significant
improvement is encouraging but variable and
perhaps a little too gradual.
It is going to take time and much more than that to
change how students receive instruction and how
teachers deliver that instruction to them. It is a big
ask of university students who are used to years of
being required to memorise facts – often from a
single textbook – and then regurgitate those same
facts in a formal high-stake exam, to suddenly
engage in problem-solving, critical analysis and
creative initiative.

It is just as big an ask of academics, who

themselves are products of this approach, to design
a curriculum and include activities that provide
opportunities for young learners to work in teams
to provide creative solutions to real-world
problems. Many academics find this incredibly
difficult and so tend to resort to what they know
and have always done.

Alternative ways of teaching

What is interesting to observe, however, is that a
substantial number of these academics have spent
time studying in the United Kingdom, the United
States, Australia and Europe. They are aware of
alternative ways of engaging in teaching. What
they have learnt overseas should not be seen as
separate or irrelevant to the teaching-learning
process in their own country.

There is a leadership role for those who are slowly

making the required changes to the teaching-
learning process, the ones who are building
curricula focused on active learning and supporting
students to expand their conceptual and intellectual
knowledge, understandings and skills. They are
demonstrating successful alternative ways to the
current textbook-centric, facts-driven curriculum.

There is much potential to grow the beautiful and

culturally rich country of Vietnam socially and
economically via its education system. It will take a
little more time for the government reforms to
really take hold and for the Vietnamese higher
education sector as a whole to realise broadly-
based positive change.

Dr Nita Temmerman is a former university pro

vice-chancellor (academic) and executive dean of
the faculty of education at the University of
Southern Queensland, Australia. She is currently
chair of two higher education academic boards in
Australia, visiting professor to Ho Chi Minh City
Open University and Solomon Islands National
University, as well as invited specialist with the
Hong Kong Council for Accreditation of Academic
and Vocational Qualifications, invited external
reviewer with the Oman Academic Accreditation
Authority, registered expert at the Australian
Tertiary Education Quality and Standards Agency,
and a published author.

Receive UWN's free weekly e-newsletters