Urban technological progress raises the competitive advantage of urban firms over rural firms in product market competition, and can lead to a brain drain in rural areas, Oudom Hean of Ohio State University in the US said at a recent conference in Ho Chi Minh City.

Vietnam’s Business & Economics Research Conference 2019 is the premier
Vietnamese conference for academics, policymakers, practitioners and
postgraduate students. (Photo courtesy of HCM City Open University)

Speaking at the Vietnam’s Business & Economics Research Conference 2019 held on July 18-20, Hean explained that technological progress in both urban and rural areas increases productivity and leads to higher wages. 

However, according to Hean, such progress has a mixed impact on rural areas. “Progress in urban technology also exerts an ambiguous effect, a brain drain, on the rural labour market."

The innovative urban region offers higher wages, leading to out-migration from the rural region, and out-migration leads to lower rural human capital and reduced unemployment for rural workers. 

Without fully accounting for these adverse effects, policies aimed at increasing regional employment by technological advancement might have undesirable outcomes.

Policymakers need to consider these effects carefully to avoid unintended consequences.

Vo Thanh Tam of the University of Economics in HCM City said that Industry 4.0 was gaining pace in the city and country. However, the workforce, especially in manufacturing, still had limitations in qualifications and skills, and was unable to keep up with new trends.

Research by Tam and his colleague has shown that employees' cognitive, social and behavioural skills are very important for employers, but many employees in the country lack this skill set.

The three-day conference is also featuring research in finance, corporate governance, labour economics, foreign direct investment and trade, energy economics and others.

Research works are conducted by scholars from domestic and foreign universities, research centres and departments.