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From central planning toward a market economy: The role of ownership and competition in Vietnamese firms’ productivity

Author

Listed:
  • Fabio Pieri

  • Le Manh-Duc

  • Enrico Zaninotto

Abstract

This paper examines the role of ownership and market competition in Vietnamese firms’ total factor productivity (TFP) from 2001 to 2011. Making use of a large panel dataset of Vietnamese manufacturing firms, we find that, on average, both foreign-owned enterprises (FOEs) and state-owned enterprises (SOEs) have performed better than privately owned enterprises (POEs) in terms of their TFP levels. However, while FOEs ranked the highest in terms of TFP in the period 2001–2006, SOEs “closed the gap†with FOEs in the period 2007–2011. SOEs’ good performance may be the result of the state-led development policies undertaken during the 2000s. We also find that market competition has been effective in enhancing average firm productivity and reducing the gaps in efficiency across firms of different ownership types. Based on these results, we compare Vietnam’s transition path with those followed by other countries.

Suggested Citation

  • Fabio Pieri & Le Manh-Duc & Enrico Zaninotto, 2018. "From central planning toward a market economy: The role of ownership and competition in Vietnamese firms’ productivity," DEM Working Papers 2018/01, Department of Economics and Management.
    • Handle: RePEc:trn:utwprg:2018/01
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    References listed on IDEAS

    as
    1. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 317-341.
    2. Ackerberg, Daniel & Caves, Kevin & Frazer, Garth, 2006. "Structural identification of production functions," MPRA Paper 38349, University Library of Munich, Germany.
    3. Wooldridge, Jeffrey M., 2009. "On estimating firm-level production functions using proxy variables to control for unobservables," Economics Letters, Elsevier, vol. 104(3), pages 112-114, September.
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    Keywords

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    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • N60 - Economic History - - Manufacturing and Construction - - - General, International, or Comparative
    • P27 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Performance and Prospects

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