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The impact of governance and transparency on firm investment in Vietnam

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  • Edmund Malesky
  • Neil McCulloch
  • Nguyen Duc Nhat

Abstract

type="main" xml:id="ecot12068-abs-0001"> A large literature asserts a causal relationship between the quality of economic governance and economic performance. However, attempts to establish such a link at an aggregate level have met with considerable methodological criticism. This paper seeks to overcome this limitation. We match a panel of Vietnamese enterprises from 2006 to 2010 with a unique panel dataset measuring sub-national economic governance to estimate a relationship between local governance and private investment. We do not find a significant relationship between investment and most traditional forms of governance. However, there is one important exception – transparency, especially the public posting of planning documents, is strongly associated with higher investment across a range of different specifications. Our results have significant implications for policy, given the prevailing theory that changes in the quality of local economic governance will spur improved economic performance.

Suggested Citation

  • Edmund Malesky & Neil McCulloch & Nguyen Duc Nhat, 2015. "The impact of governance and transparency on firm investment in Vietnam," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 23(4), pages 677-715, October.
  • Handle: RePEc:bla:etrans:v:23:y:2015:i:4:p:677-715
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    File URL: http://hdl.handle.net/10.1111/ecot.2015.23.issue-4
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    1. repec:spr:anresc:v:59:y:2017:i:1:d:10.1007_s00168-017-0820-y is not listed on IDEAS

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