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Corruption, growth, and governance: Private vs. state-owned firms in Vietnam

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  • Nguyen, Thuy Thu
  • van Dijk, Mathijs A.

Abstract

We provide a firm-level analysis of the relation between corruption and growth for private firms and state-owned enterprises (SOEs) in Vietnam. We obtain three different measures of the perceived corruption severity from a 2005 survey among 741 private firms and 133 SOEs. We find that corruption hampers the growth of Vietnam’s private sector, but is not detrimental for growth in the state sector. We document significant differences in the corruption severity across 24 provinces in Vietnam that can be explained by the quality of provincial public governance (such as the costs of new business entry, land access, and private sector development policies). Our results suggest that corruption may harm economic growth because it favors the state sector at the expense of the private sector and that improving the quality of local public governance can help to mitigate corruption and stimulate economic growth.

Suggested Citation

  • Nguyen, Thuy Thu & van Dijk, Mathijs A., 2012. "Corruption, growth, and governance: Private vs. state-owned firms in Vietnam," Journal of Banking & Finance, Elsevier, vol. 36(11), pages 2935-2948.
    • Handle: RePEc:eee:jbfina:v:36:y:2012:i:11:p:2935-2948
    DOI: 10.1016/j.jbankfin.2012.03.027
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    More about this item

    Keywords

    Corruption; Growth; Governance; Private firms; State-owned enterprises;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • P37 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Legal

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