Productivity Ownership and Producer Concentration in Transition: Further Evidence from Vietnamese Manufacturing

Multinational corporations (MNCs), both wholly-foreign and joint ventures, and state-owned enterprises (SOEs) often had higher labor productivity and lower capital productivity than local, private firms in Vietnamese manufacturing during 2000-2006. After controlling for firm-level variation in factor intensities and scale, and industry-level variation in producer concentration, total factor productivity differentials between MNC joint ventures or SOEs on the one hand, and private firms on the other, were positive and statistically significant in samples of all manufacturing firms combined and in most industry-level samples for 2001-2006 and two subperiods. Differentials between wholly-foreign MNCs and private firms were generally insignificant or negative in a contemporaneous specification, but more often positive and significant when a lagged specification was used to account for potential simultaneity. Estimates of productivity spillovers from SOEs and MNCs to private firms and the productivity effects of concentration tended to be insignificant statistically, both when all manufacturing industries were combined and in subsamples of industries with relatively high or low concentration. These results are consistent with the view that Vietnam's manufacturing firms, especially wholly-foreign MNCs and private firms, are often engaged in assembly operations using relatively simple technologies, and that local firms are often quick to imitate their MNC competitors. However, the substantial variation of estimates among industries and time periods suggests that combining heterogeneous industries or time periods biases productivity estimates in this diverse, rapidly changing economy.