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Institutions matter: the case of Vietnam

Author

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  • Thi Bich Tran
  • Tom Kompas
  • Quentin Grafton

Abstract

The paper investigates institutional reforms in Vietnam and their impact on the economic performance of firms. Using the provincial competitiveness index 2006 (PCI06) and firm-level data in Vietnam in 2005, the results show that provincial competitiveness is economically and statistically significant in explaining cross-province differences in firm performance. We find that a one percentage point improvement in government practice could increase the daily value-added of an average firm by an amount equivalent to nearly three times per capita GDP per day. The results show that an improvement in providing market information, more secure land tenure and labor training assistance has a positive effect on firm performance. By contrast, weaknesses in the judiciary system and administrative reforms impede growth of non-state firms. The findings indicate that governance is an important obstacle to the development of the non-state sector in Vietnam.

Suggested Citation

  • Thi Bich Tran & Tom Kompas & Quentin Grafton, 2008. "Institutions matter: the case of Vietnam," International and Development Economics Working Papers idec08-01, International and Development Economics.
  • Handle: RePEc:idc:wpaper:idec08-01
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    File URL: https://crawford.anu.edu.au/degrees/idec/working_papers/IDEC08-01.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Bai, Jie & Jayachandran, Seema & Malesky, Edmund J. & Olken, Benjamin, 2013. "Does Economic Growth Reduce Corruption? Theory and Evidence from Vietnam," CEPR Discussion Papers 9677, C.E.P.R. Discussion Papers.
    2. Nam Tran-Quy & Almas Heshmati, 2009. "Measurements and Determinants of Pay Inequality and its Impacts on Firms Performance in Vietnam," TEMEP Discussion Papers 200930, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Nov 2009.
    3. Man Zhang & Qian Gao & Hyuk-Soo Cho, 2017. "The effect of sub-national institutions and international entrepreneurial capability on international performance of export-focused SMEs: Evidence from China and South Korea," Journal of International Entrepreneurship, Springer, vol. 15(1), pages 85-110, March.
    4. Dang, Duc Anh, 2013. "How foreign direct investment promote institutional quality: Evidence from Vietnam," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 1054-1072.
    5. repec:spr:anresc:v:59:y:2017:i:1:d:10.1007_s00168-017-0820-y is not listed on IDEAS
    6. Harbi, Sana El & Anderson, Alistair R., 2010. "Institutions and the shaping of different forms of entrepreneurship," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(3), pages 436-444, June.
    7. Doan, Quang Hung & Vu, Hoang Nam & Dao, Ngoc Tien, 2013. "Sub-National Institutions and Firm Survival in Vietnam," MPRA Paper 63653, University Library of Munich, Germany.
    8. Jabbar, Mohammad A., 2009. "Outlook for meat markets to 2020:Global and Southeast Asia regional perspectives," Research Reports 181855, International Livestock Research Institute.
    9. repec:hal:journl:halshs-00429732 is not listed on IDEAS
    10. Nguyen, Thang V. & Le, Ngoc T.B. & Bryant, Scott E., 2013. "Sub-national institutions, firm strategies, and firm performance: A multilevel study of private manufacturing firms in Vietnam," Journal of World Business, Elsevier, vol. 48(1), pages 68-76.

    More about this item

    JEL classification:

    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • N01 - Economic History - - General - - - Development of the Discipline: Historiographical; Sources and Methods
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy

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