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Business reforms and total factor productivity in Vietnamese manufacturing

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  • Nguyen, Huong Quynh

Abstract

Vietnam implemented reforms in the 2000s to ease start-up of new businesses with dramatic effect on firm entry and market competition. This study examines firm level data for the period 2000–2010 to analyze total factor productivity (TFP) in connection with the reforms, adopting a semi-parametric technique developed by Wooldridge (2009) and Petrin and Levinsohn (2012) to measure TFP. Intensified competition is hypothesized to have driven convergence of TFP within industrial sectors as technologies best suited to Vietnamese market conditions became more widely implemented. The evidence strongly supports this hypothesis with convergence found for 16 of the 17 sectors analyzed. Further, comparison of TFP growth rates between the first and second half of the decade shows mixed results by sector and region. More often than not, TFP growth is seen to have slowed over time. This suggests that competition acted not only to push low TFP firms to exit the market or raise productivity, it also discouraged use of technologies that may have been overly advanced and not cost efficient for Vietnam.

Suggested Citation

  • Nguyen, Huong Quynh, 2017. "Business reforms and total factor productivity in Vietnamese manufacturing," Journal of Asian Economics, Elsevier, vol. 51(C), pages 33-42.
    • Handle: RePEc:eee:asieco:v:51:y:2017:i:c:p:33-42
    DOI: 10.1016/j.asieco.2017.06.003
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    Cited by:

    1. Huynh, Linh & Hoang, Hien, 2021. "Technical Efficiency and Total Factor Productivity Changes in Manufacturing Industries: Recent Advancements in Stochastic Frontier Model Approach," MPRA Paper 117621, University Library of Munich, Germany, revised 2022.
    2. Guo, Yunxia & Yu, Mengyao & Xu, Mingchen & Tang, Ying & Huang, Jingran & Liu, Jia & Hao, Yu, 2023. "Productivity gains from green finance: A holistic and regional examination from China," Energy Economics, Elsevier, vol. 127(PA).
    3. Viet Nguyen, Thanh & Simioni, Michel & Le Van, Dao, 2019. "Assessment of TFP change at provincial level in Vietnam: New evidence using Färe–Primont productivity index," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 329-345.
    4. Hoang, Manh Cuong & Schiller, Daniel, 2023. "Which firms benefit the most from agglomeration? New evidence from an emerging country with consistent measure of productivity," Journal of Asian Economics, Elsevier, vol. 86(C).
    5. Hai Quang Nguyen, 2021. "Total Factor Productivity Growth of Vietnamese Enterprises by Sector and Region: Evidence from Panel Data Analysis," Economies, MDPI, vol. 9(3), pages 1-17, August.
    6. Le, Manh-Duc & Pieri, Fabio & Zaninotto, Enrico, 2019. "From central planning towards a market economy: The role of ownership and competition in Vietnamese firms’ productivity," Journal of Comparative Economics, Elsevier, vol. 47(3), pages 693-716.
    7. Peng, Fei & Peng, Langchuan & Wang, Zheng, 2021. "How do VAT reforms in the service sectors impact TFP in the manufacturing sector: Firm-level evidence from China," Economic Modelling, Elsevier, vol. 99(C).

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    More about this item

    Keywords

    D24; H79; L60; O53; P21; Vietnam; Total factor productivity dispersion; Doing business reforms;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • H79 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • P21 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Planning, Coordination, and Reform

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