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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.

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  • 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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