IDEAS home Printed from https://ideas.repec.org/a/bla/ecorec/v98y2022is1p52-64.html
   My bibliography  Save this article

Capital Misallocation and State Ownership Policy in Vietnam

Author

Listed:
  • Phan Le

Abstract

This paper examines capital misallocation of manufacturing firms in Vietnam during the period 2008–17. Three sources of capital misallocation are investigated: adjustment costs, uncertainty and policy distortions. The findings reveal the modest contribution of adjustment costs to total misallocation. In contrast, policy distortions account for 81 per cent of capital misallocation in Vietnam and lead to a total factor productivity gap of 110 per cent in the manufacturing sector relative to the undistorted first‐best level. The paper examines one specific type of policy distortions – preferential treatments of state‐owned enterprises – and finds that these policies cause a 38 per cent loss in aggregate manufacturing productivity.

Suggested Citation

  • Phan Le, 2022. "Capital Misallocation and State Ownership Policy in Vietnam," The Economic Record, The Economic Society of Australia, vol. 98(S1), pages 52-64, September.
    • Handle: RePEc:bla:ecorec:v:98:y:2022:i:s1:p:52-64
    DOI: 10.1111/1475-4932.12666
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1475-4932.12666
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1475-4932.12666?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. McFadden, Daniel, 1989. "A Method of Simulated Moments for Estimation of Discrete Response Models without Numerical Integration," Econometrica, Econometric Society, vol. 57(5), pages 995-1026, September.
    2. Daron Acemoglu & Fabrizio Zilibotti, 2001. "Productivity Differences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 563-606.
    3. Bils, Mark & Klenow, Peter J. & Ruane, Cian, 2021. "Misallocation or Mismeasurement?," Journal of Monetary Economics, Elsevier, vol. 124(S), pages 39-56.
    4. Chang-Tai Hsieh & Peter J. Klenow, 2009. "Misallocation and Manufacturing TFP in China and India," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(4), pages 1403-1448.
    5. Bachmann, Rüdiger & Elstner, Steffen, 2015. "Firm optimism and pessimism," European Economic Review, Elsevier, vol. 79(C), pages 297-325.
    6. Diego Restuccia & Richard Rogerson, 2008. "Policy Distortions and Aggregate Productivity with Heterogeneous Plants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 707-720, October.
    7. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 83-116.
    8. John Asker & Allan Collard-Wexler & Jan De Loecker, 2014. "Dynamic Inputs and Resource (Mis)Allocation," Journal of Political Economy, University of Chicago Press, vol. 122(5), pages 1013-1063.
    9. Peter J. Klenow & Andrés Rodríguez-Clare, 1997. "The Neoclassical Revival in Growth Economics: Has It Gone Too Far?," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 73-114, National Bureau of Economic Research, Inc.
    10. Thang Ngoc Bach, 2019. "State owned enterprises and capital misallocation in Vietnam," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 24(3), pages 430-451, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Congguo Zhang & Di Yao & Yanlin Zhen & Weiwei Li & Kerun Li, 2022. "Mismatched Relationship between Urban Industrial Land Consumption and Growth of Manufacturing: Evidence from the Yangtze River Delta," Land, MDPI, vol. 11(9), pages 1-35, August.
    2. He, Weijun & Li, Wanyu & Wang, Chun & Wang, Siyuan & Yang, Yuantao, 2024. "Does energy resource misallocation affect energy utilization efficiency? Evidence from Chinese provincial panel data," Energy, Elsevier, vol. 288(C).
    3. Maurice Bun & Theoplasti Kolaiti & Tolga Özden, 2023. "Misallocation and Productivity Growth: a Meta-analysis," Working Papers 774, DNB.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Diego Restuccia, 2019. "Misallocation and aggregate productivity across time and space," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(1), pages 5-32, February.
    2. David Lagakos, 2009. "Superstores or mom and pops? Technolgy adoption and productivity differences in retail trade," Staff Report 428, Federal Reserve Bank of Minneapolis.
    3. Diego Restuccia & Richard Rogerson, 2017. "The Causes and Costs of Misallocation," Journal of Economic Perspectives, American Economic Association, vol. 31(3), pages 151-174, Summer.
    4. Ruiz-García, J. C., 2021. "Financial Frictions, Firm Dynamics and the Aggregate Economy: Insights from Richer Productivity Processes," Janeway Institute Working Papers 2103, Faculty of Economics, University of Cambridge.
    5. Pellegrino, Bruno & Zheng, Geoffery, 2024. "Quantifying the impact of red tape on investment: A survey data approach," Journal of Financial Economics, Elsevier, vol. 152(C).
    6. Goraya, Sampreet Singh, 2023. "How does caste affect entrepreneurship? birth versus worth," Journal of Monetary Economics, Elsevier, vol. 135(C), pages 116-133.
    7. Alimov, Behzod, 2019. "Private debt, public debt, and capital misallocation," IWH-CompNet Discussion Papers 7/2019, Halle Institute for Economic Research (IWH).
    8. Michael König & Kjetil Storesletten & Zheng Song & Fabrizio Zilibotti, 2022. "From Imitation to Innovation: Where Is All That Chinese R&D Going?," Econometrica, Econometric Society, vol. 90(4), pages 1615-1654, July.
    9. J. Rodrigo Fuentes & Verónica Mies, 2013. "Productivity Differences and the Stage of Development: Where are the Bottlenecks?," Documentos de Trabajo 430, Instituto de Economia. Pontificia Universidad Católica de Chile..
    10. Dalila Nicet-Chenaf & Eric Rougier, 2009. "Human capital and structural change: how do they interact with each others in growth," Post-Print hal-00798441, HAL.
    11. Francisco Queiró, 2022. "Entrepreneurial Human Capital and Firm Dynamics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(4), pages 2061-2100.
    12. Rok Spruk & Mitja Kovac, 2018. "Inefficient Growth," Review of Economics and Institutions, Università di Perugia, vol. 9(2).
    13. Mr. Ashvin Ahuja, 2012. "De-Monopolization toward Long-Term Prosperity in China," IMF Working Papers 2012/075, International Monetary Fund.
    14. Jerzmanowski, Michal & Tamura, Robert, 2019. "Directed technological change & cross-country income differences: A quantitative analysis," Journal of Development Economics, Elsevier, vol. 141(C).
    15. Laura Alfaro & Andrew Charlton & Fabio Kanczuk, 2009. "Plant Size Distribution and Cross-Country Income Differences," NBER Chapters, in: NBER International Seminar on Macroeconomics 2008, pages 243-272, National Bureau of Economic Research, Inc.
    16. Hernan Moscoso Boedo & Toshihiko Mukoyama, 2012. "Evaluating the effects of entry regulations and firing costs on international income differences," Journal of Economic Growth, Springer, vol. 17(2), pages 143-170, June.
    17. Chen, Binkai & Lin, Justin Yifu, 2021. "Development strategy, resource misallocation and economic performance," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 612-634.
    18. M. Battisti & F. Belloc & M. Del Gatto, 2017. "Technology-specific Production Functions," Working Paper CRENoS 201709, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    19. Rui Castro & Pavel Ševčík, 2024. "Occupational choice, human capital and financial constraints," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 57(3), pages 674-703, August.
    20. Mendez-Guerra, Carlos, 2017. "Labor productivity, capital accumulation, and aggregate efficiency across countries: Some stylized facts," MPRA Paper 82461, University Library of Munich, Germany.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ecorec:v:98:y:2022:i:s1:p:52-64. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/esausea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.