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The Role of Technology, Investment and Ownership Structure in the Productivity Performance of the Manufacturing Sector in Vietnam

Author

Listed:
  • Carol Newman

    () (Department of Economics, Trinity College Dublin)

  • Gaia Narciso

    () (Department of Economics, Trinity College Dublin)

  • Finn Tarp

    () (Department of Economics, University of Copenhagen and UNU-Wider)

  • Vu Xuan Nguyet Hong

    () (Department for Economic Science Management Research, Central Institute for Economic Management, Vietnam)

Abstract

This paper explores the productivity performance of the manufacturing sector in Vietnam between 2001 and 2007. Total Factor Productivity indices are computed using an index number approach and the productivity performance of manufacturing sub-sectors is analysed. We find that productivity increases in almost all sectors and that for many sectors the dispersion in productivity is declining over time. However, for the most productive sectors the gap is widening suggesting that productivity is being driven by the most productive enterprises getting better, leaving the least productive behind. The empirical analysis reveals investment and technology usage as important determinants of enterprise productivity levels. Specifically, higher levels of productivity are found in foreign- and state-owned enterprises, driven almost entirely by higher levels of investment and technology usage. Our results provide a strong quantitative basis in support of ongoing government initiatives aimed at encouraging investment in technology and innovation. They also point to the clear need for such initiatives to be complemented by measures to provide a more balanced distribution of investment, such that a level playing field is created for the different types of enterprises.

Suggested Citation

  • Carol Newman & Gaia Narciso & Finn Tarp & Vu Xuan Nguyet Hong, 2009. "The Role of Technology, Investment and Ownership Structure in the Productivity Performance of the Manufacturing Sector in Vietnam," Trinity Economics Papers tep0109, Trinity College Dublin, Department of Economics.
  • Handle: RePEc:tcd:tcduee:tep0109
    as

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    File URL: http://www.tcd.ie/Economics/TEP/2009/TEP0109.pdf
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    References listed on IDEAS

    as
    1. James R. Tybout, 2000. "Manufacturing Firms in Developing Countries: How Well Do They Do, and Why?," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 11-44, March.
    2. Van Biesebroeck, Johannes, 2008. "The Sensitivity of Productivity Estimates," Journal of Business & Economic Statistics, American Statistical Association, vol. 26, pages 311-328.
    3. Eslava, Marcela & Haltiwanger, John & Kugler, Adriana & Kugler, Maurice, 2004. "The effects of structural reforms on productivity and profitability enhancing reallocation: evidence from Colombia," Journal of Development Economics, Elsevier, vol. 75(2), pages 333-371, December.
    4. Nina Pavcnik, 2002. "Trade Liberalization, Exit, and Productivity Improvements: Evidence from Chilean Plants," Review of Economic Studies, Oxford University Press, vol. 69(1), pages 245-276.
    5. Ann E. Harrison & Brian J. Aitken, 1999. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," American Economic Review, American Economic Association, vol. 89(3), pages 605-618, June.
    6. Richard Ericson & Ariel Pakes, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," Review of Economic Studies, Oxford University Press, vol. 62(1), pages 53-82.
    7. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
    8. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    9. Eslava, Marcela & Haltiwanger, John & Kugler, Adriana & Kugler, Maurice, 2004. "The effects of structural reforms on productivity and profitabality enhancing reallocation: evidence from Colombia," Discussion Paper Series In Economics And Econometrics 0408, Economics Division, School of Social Sciences, University of Southampton.
    10. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-1150, September.
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