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Corruption, trade liberalization and firm productivity: Evidence from Vietnam

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  • Tomasi, Chiara
  • Le, Quoc Thai

Abstract

This paper investigates how corruption influences the gains from trade liberalization. Using firm-level data from Vietnam from 2000 to 2012, which includes the country’s accession to the World Trade Organization (WTO), the analysis provides robust causal evidence, based on fixed effects and instrumental variable estimation techniques, that corruption mitigates the positive impact of tariff reduction on firm productivity. One key mechanism through which corruption may limit productivity is by reducing importing. The paper shows that the likelihood of importing following input tariff cuts is lower for firms in provinces with higher corruption. We examine the broader implications of our firm-level findings and show that, in a counterfactual scenario without corruption, Vietnam’s productivity gains from trade liberalization would have been higher.

Suggested Citation

  • Tomasi, Chiara & Le, Quoc Thai, 2026. "Corruption, trade liberalization and firm productivity: Evidence from Vietnam," European Economic Review, Elsevier, vol. 184(C).
    • Handle: RePEc:eee:eecrev:v:184:y:2026:i:c:s0014292126000085
    DOI: 10.1016/j.euroecorev.2026.105264
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    Keywords

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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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