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Productivity and public expenditure: a structural estimation for Vietnam’s provinces

Author

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  • Phu Nguyen-Van

    (BETA, CNRS, INRA and Université de Strasbourg
    Thang Long University)

  • Thi Kim Cuong Pham

    (BETA, CNRS, INRA and Université de Strasbourg)

  • Duc-Anh Le

    (BETA, CNRS, INRA and Université de Strasbourg)

Abstract

We propose a structural approach to investigate total factor productivity (TFP) and economic growth of 58 provinces and municipalities of Vietnam (known as one of the most dynamic emerging economies in the last few years). The analysis is applied to the provincial data that are available to us for the period 2000–2007. TFP is composed of three components: an autonomous technological change, an observed deterministic part depending on external factors, and an unobserved stochastic part. Estimation results do not show any evidence regarding the impacts of national and local public spending on TFP and economic growth of Vietnam’s provinces. On the contrary, human capital and industry share (compared to shares of agriculture and services) significantly increase the provincial TFP, helping to explain the cross-province differences in terms of productivity. Finally, TFP of Vietnam’s provinces does not converge in the long run as it displays a polarization feature around two main groups of provinces, a large group with low TFP levels and a much smaller group with high TFP levels. This bipolar pattern of TFP distribution supports the competitiveness disparity among the Vietnam’s provinces.

Suggested Citation

  • Phu Nguyen-Van & Thi Kim Cuong Pham & Duc-Anh Le, 2019. "Productivity and public expenditure: a structural estimation for Vietnam’s provinces," Asia-Pacific Journal of Regional Science, Springer, vol. 3(1), pages 95-120, February.
  • Handle: RePEc:spr:apjors:v:3:y:2019:i:1:d:10.1007_s41685-018-0085-1
    DOI: 10.1007/s41685-018-0085-1
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    More about this item

    Keywords

    National public expenditure; Local public expenditure; Human capital; Sectoral shares; Total factor productivity; Vietnam’s provinces;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics

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