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Firms and Regional Favoritism

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  • VU, Manh Tien
  • Yamada, Hiroyuki

Abstract

We examine formal firm behavior in response to regional favoritism by top-ranked politicians using a balanced panel of 444 rural districts (yearly observations) in Vietnam during 2000 to 2011 and census microdata of firms, politicians’ home towns, and climate and population microdata. The study finds that the number of firms and aggregated employment of firms increase in the home town districts of politicians after they resume office. The findings suggest that regional favoritism in a single–party system maintains the continuous development of firms in politicians’ home town districts and widens the gaps among rural districts.

Suggested Citation

  • VU, Manh Tien & Yamada, Hiroyuki, 2017. "Firms and Regional Favoritism," AGI Working Paper Series 2017-16, Asian Growth Research Institute.
  • Handle: RePEc:agi:wpaper:00000136
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    References listed on IDEAS

    as
    1. Georgeanne M. Artz & Younjun Kim & Peter F. Orazem, 2016. "Does Agglomeration Matter Everywhere?: New Firm Location Decisions In Rural And Urban Markets," Journal of Regional Science, Wiley Blackwell, vol. 56(1), pages 72-95, January.
    2. Syrquin, Moshe, 1988. "Patterns of structural change," Handbook of Development Economics,in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 7, pages 203-273 Elsevier.
    3. Mara Faccio, 2006. "Politically Connected Firms," American Economic Review, American Economic Association, vol. 96(1), pages 369-386, March.
    4. Kiminori Matsuyama, 2002. "The Rise of Mass Consumption Societies," Journal of Political Economy, University of Chicago Press, vol. 110(5), pages 1035-1070, October.
    5. Ren Mu & Dominique van de Walle, 2011. "Rural Roads and Local Market Development in Vietnam," Journal of Development Studies, Taylor & Francis Journals, vol. 47(5), pages 709-734.
    6. VU, Tien Manh & Yamada, Hiroyuki, 2017. "Convergence of public and private enterprise wages in a transition economy: Evidence from a distributional decomposition in Vietnam, 2002–2014," AGI Working Paper Series 2017-10, Asian Growth Research Institute.
    7. Quoc-Anh Do & Kieu-Trang Nguyen & Anh N. Tran, 2017. "One Mandarin Benefits the Whole Clan: Hometown Favoritism in an Authoritarian Regime," American Economic Journal: Applied Economics, American Economic Association, vol. 9(4), pages 1-29, October.
    8. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    9. Fiva, Jon H. & Halse, Askill H., 2016. "Local favoritism in at-large proportional representation systems," Journal of Public Economics, Elsevier, vol. 143(C), pages 15-26.
    10. Quoc-Anh Do & Kieu-Trang Nguyen & Anh N. Tran, 2017. "One Mandarin Benefits the Whole Clan: Hometown Favoritism in an Authoritarian Regime," American Economic Journal: Applied Economics, American Economic Association, vol. 9(4), pages 1-29, October.
    11. Quoc-Anh Do & Kieu-Trang Nguyen & Anh N. Tran, 2017. "One Mandarin Benefits the Whole Clan: Hometown Favoritism in an Authoritarian Regime," American Economic Journal: Applied Economics, American Economic Association, vol. 9(4), pages 1-29, October.
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    More about this item

    Keywords

    Firms; Favoritism; Politician; Rural; Vietnam; D22; D25; D72; R11; Z1; P28; O17;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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