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Technical efficiency in the Vietnamese manufacturing sector

Author

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  • Hung T. Pham

    (Department of International Economics, National Economics University, 207 Giai Phong Road, Hanoi, Vietnam)

  • Thanh L. Dao

    (Department of Economics, University of Sussex, BN1 9SN, UK)

  • Barry Reilly

    (Department of Economics, University of Sussex, BN1 9SN, UK)

Abstract

The manufacturing sector has developed into the Vietnamese economy's most important sector on the basis of its contribution to export and GDP growth over the past decade. The doi moi reform process transformed Vietnam's manufacturing activity from a state-dominated sector to a vibrant one containing important roles for both newly created domestic and foreign-invested private firms. This paper employs a stochastic frontier estimation approach, in conjunction with data drawn from the Vietnam Enterprise Survey for 2003, to estimate and inform the determinants of technical efficiency in the manufacturing sector. The empirical results reveal that an average manufacturing enterprise is operating at nearly 62 per cent of its technically efficient frontier with an estimated standard deviation of around 16 per cent. The study provides empirical evidence of a positive relationship between technical efficiency, export orientation and several measures of trade openness. Copyright © 2009 John Wiley & Sons, Ltd.

Suggested Citation

  • Hung T. Pham & Thanh L. Dao & Barry Reilly, 2010. "Technical efficiency in the Vietnamese manufacturing sector," Journal of International Development, John Wiley & Sons, Ltd., vol. 22(4), pages 503-520.
  • Handle: RePEc:wly:jintdv:v:22:y:2010:i:4:p:503-520
    DOI: 10.1002/jid.1588
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    File URL: http://hdl.handle.net/10.1002/jid.1588
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    References listed on IDEAS

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    1. Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, vol. 47(1), pages 1-25, February.
    2. Quoc Ngu Vu, 2003. "Technical Efficiency of Industrial State-Owned Enterprises in Vietnam," Asian Economic Journal, East Asian Economic Association, vol. 17(1), pages 87-101, March.
    3. Jones, Derek & Klinedinst, Mark & Rock, Charles, 1998. "Productive Efficiency during Transition: Evidence from Bulgarian Panel Data," Journal of Comparative Economics, Elsevier, vol. 26(3), pages 446-464, September.
    4. Mary Hallward-Driemeier & Giuseppe Iarossi & Kenneth L. Sokoloff, 2002. "Exports and Manufacturing Productivity in East Asia: A Comparative Analysis with Firm-Level Data," NBER Working Papers 8894, National Bureau of Economic Research, Inc.
    5. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    6. Stoyan Tenev & Amanda Carlier & Omar Chaudry & Quynh-Trang Nguyen, 2003. "Informality and the Playing Field in Vietnam's Business Sector," World Bank Publications, The World Bank, number 15084.
    7. Greene, William H., 1990. "A Gamma-distributed stochastic frontier model," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 141-163.
    8. Kumbhakar,Subal C. & Lovell,C. A. Knox, 2003. "Stochastic Frontier Analysis," Cambridge Books, Cambridge University Press, number 9780521666633, May.
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    Cited by:

    1. José Contreras & Andrés Santeliz & Oscar Carvallo, 2012. "Patterns of technical efficiency in the Venezuelan manufacturing sector (2007)," Economía, Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela, vol. 37(34), pages 121-137, July-Dece.
    2. Vu, Van Huong, 2012. "Higher productivity in Exporters: self-selection, learning by exporting or both? Evidence from Vietnamese manufacturing SMEs," MPRA Paper 40708, University Library of Munich, Germany.

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