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Contribution of productivity and firm size to value-added: Evidence from Vietnam

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  • Tran, Thi Bich
  • Grafton, Quentin
  • Kompas, Tom

Abstract

A new indexing method is developed to decompose the contributions of productivity, prices and firm size to a firm's value-added. The method introduces an error term into the decomposition equation to capture measurement biases which are caused by using the deflator instead of the observed price and all other sorts of measurement error. An application of the method is given using private small and medium manufacturing firm level data in Vietnam from 1996 and 2001. The error index decomposition method provides a comparison of performance of all firms to the hypothetical representative firm. The analysis allows firms and policy makers to realize the key factors contributing to the success or failure of a firm and suggest strategies to improve firm economic performance.

Suggested Citation

  • Tran, Thi Bich & Grafton, Quentin & Kompas, Tom, 2009. "Contribution of productivity and firm size to value-added: Evidence from Vietnam," International Journal of Production Economics, Elsevier, vol. 121(1), pages 274-285, September.
    • Handle: RePEc:eee:proeco:v:121:y:2009:i:1:p:274-285
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    Cited by:

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    2. Christine Ngoc Ngo & Miao Chi, 2017. "Differentials in market constraints and value addition among micro, small, and medium enterprises in Vietnam," WIDER Working Paper Series wp-2017-82, World Institute for Development Economic Research (UNU-WIDER).
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