From central planning towards a market economy: The role of ownership and competition in Vietnamese firms’ productivity |
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Authors: | Manh-Duc Le Fabio Pieri Enrico Zaninotto |
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Institution: | 1. University of Transport and Communications, Department of Project Management, No. 3 Cau Giay St, 10000, Hanoi, Vietnam;2. FPT University, Department of Business Administration, Hoa Lac High Tech Park, 10000, Hanoi, Vietnam;3. University of Trento, Department of Economics and Management, Via Inama 5, 38122, Trento, Italy |
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Abstract: | This paper examines the role of ownership and market competition in Vietnamese firms’ total factor productivity (TFP) from 2001 to 2011. Making use of a large panel dataset of manufacturing firms, we find that, on average, both foreign-owned enterprises (FOEs) and state-owned enterprises (SOEs) have performed better than privately owned enterprises (POEs) in terms of their TFP levels. However, while FOEs’ TFP ranked the highest in the period 2001–2006, SOEs “closed the gap” in the period 2007–2011. Moreover, we find that market competition has been effective in enhancing average firm productivity and in reducing the gaps in efficiency across ownership types. SOEs’ remarkable performance may be linked to several concurrent factors experienced during the period 2001–2011, namely, the process of restructuring the state sector during the 2000s, the increased economic integration due to the country's accession to the World Trade Organization (2007) and, finally, the preferential access to financial capital and land granted to SOEs. While some evidence supports SOEs’ equitization as an explanation for their remarkable productivity performance, WTO accession and cheaper access to inputs do not fully explain it. |
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Keywords: | Corresponding author Ownership Market competition TFP Vietnamese manufacturing Transition economies D24 L33 O53 N60 P27 |
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