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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.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Banking & Finance.

Volume (Year): 36 (2012)
Issue (Month): 11 ()
Pages: 2935-2948

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Handle: RePEc:eee:jbfina:v:36:y:2012:i:11:p:2935-2948

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Web page: http://www.elsevier.com/locate/jbf

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Keywords: Corruption; Growth; Governance; Private firms; State-owned enterprises;

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Citations

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Cited by:
  1. Tien Manh Vu & Hiroyuki Yamada & Tsunehiro Otsuki, 2014. "The rise and fall of multinational enterprises in Vietnam: survival analysis using census data during 2000-2011," OSIPP Discussion Paper 14E001, Osaka School of International Public Policy, Osaka University.
  2. Thomas Gries & Ha van Dung, 2014. "Institutional environment, human capital, and firm growth: Evidence from Vietnam," Working Papers CIE 83, University of Paderborn, CIE Center for International Economics.
  3. Dang, Duc Anh, 2013. "How foreign direct investment promote institutional quality: Evidence from Vietnam," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 1054-1072.
  4. Vu, Van Huong, 2012. "Private manufacturing SMEs survival and growth in Vietnam: The role of export participation," MPRA Paper 42489, University Library of Munich, Germany.

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