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Productivity-enhancing manufacturing clusters: Evidence from Vietnam

Author

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  • Howard, Emma
  • Newman, Carol
  • Rand, John
  • Tarp, Finn

Abstract

In this paper we explore the extent to which firms experience productivity spillovers from clustering using a rich data source from Vietnam for 2002 to 2007, a period of significant transition. We address issues of simultaneity, self-selection and endogenous location choice of firms in an estimation of firm level productivity. Controlling for competition effects and distinguishing between urbanization and localization economies, we find strong evidence for productivity spillovers from clustering. The effects of these spillovers are found to be particularly large for foreign-owned firms. Our results provide support for spatial clustering policies in developing countries aimed at attracting foreign investment.

Suggested Citation

  • Howard, Emma & Newman, Carol & Rand, John & Tarp, Finn, 2014. "Productivity-enhancing manufacturing clusters: Evidence from Vietnam," WIDER Working Paper Series 071, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:wp2014-071
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    File URL: http://www.wider.unu.edu/sites/default/files/wp2014-071.pdf
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    References listed on IDEAS

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    1. Helsley, Robert W. & Strange, William C., 1991. "Agglomeration economies and urban capital markets," Journal of Urban Economics, Elsevier, vol. 29(1), pages 96-112, January.
    2. Chhair, Sokty & Newman, Carol, 2014. "Clustering, competition, and spillover effects: Evidence from Cambodia," WIDER Working Paper Series 065, World Institute for Development Economic Research (UNU-WIDER).
    3. Jan De Loecker, 2013. "Detecting Learning by Exporting," American Economic Journal: Microeconomics, American Economic Association, vol. 5(3), pages 1-21, August.
    4. Henderson, J. Vernon, 2003. "Marshall's scale economies," Journal of Urban Economics, Elsevier, vol. 53(1), pages 1-28, January.
    5. Robert E. Hall & Charles I. Jones, "undated". "The Productivity of Nations," Working Papers 96012, Stanford University, Department of Economics.
    6. Henderson, J. Vernon, 1986. "Efficiency of resource usage and city size," Journal of Urban Economics, Elsevier, vol. 19(1), pages 47-70, January.
    7. Bigsten, Arne & Gebreeyesus, Mulu & Siba, Eyerusalem & Soderbom, Måns, 2012. "Enterprise Agglomeration, Output Prices, and Physical Productivity: Firm-Level Evidence from Ethiopia," WIDER Working Paper Series 085, World Institute for Development Economic Research (UNU-WIDER).
    8. Glenn Ellison & Edward L. Glaeser & William R. Kerr, 2010. "What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns," American Economic Review, American Economic Association, vol. 100(3), pages 1195-1213, June.
    9. repec:unu:wpaper:wp2012-084 is not listed on IDEAS
    10. Emma Howard & Carol Newman & Finn Tarp, 2016. "Measuring industry coagglomeration and identifying the driving forces," Journal of Economic Geography, Oxford University Press, vol. 16(5), pages 1055-1078.
    11. repec:unu:wpaper:wp2012-85 is not listed on IDEAS
    12. Newman, Carol & Rand, John & Tarp, Finn & Thi Tue Anh, Nguyen, 2014. "Exporting and productivity: The role of ownership and innovation in the case of Vietnam," WIDER Working Paper Series 070, World Institute for Development Economic Research (UNU-WIDER).
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    Citations

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    Cited by:

    1. Emma Howard, 2017. "Social networks, geographic proximity, and firm performance in Viet Nam," WIDER Working Paper Series 069, World Institute for Development Economic Research (UNU-WIDER).
    2. Marco Sanfilippo & Adnan Seric, 2016. "Spillovers from agglomerations and inward FDI: a multilevel analysis on sub-Saharan African firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 147-176, February.
    3. Nguyen, Huong, 2016. "Ease of Doing Business Reforms in Vietnam: Implications for Total Factor Productivity in Manufacturing Industries," Papers 999, World Trade Institute.
    4. repec:taf:jdevst:v:54:y:2018:i:2:p:292-311 is not listed on IDEAS
    5. Calza, Elisa & Goedhuys, Micheline, 2016. "Entrepreneurial heterogeneity and the design of entrepreneurship policies for economic growth and inclusive development," MERIT Working Papers 043, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. repec:taf:ecinnt:v:28:y:2019:i:1:p:23-44 is not listed on IDEAS
    7. Carol Newman & John Page, 2017. "Industrial clusters: The case for Special Economic Zones in Africa," WIDER Working Paper Series 015, World Institute for Development Economic Research (UNU-WIDER).
    8. Stephan Kyburz, Huong Quynh Nguyen, 2017. "Does Proximity to Foreign Invested Firms Stimulate Productivity Growth of Domestic Firms? Firmlevel Evidence from Vietnam," Diskussionsschriften credresearchpaper16, Universitaet Bern, Departement Volkswirtschaft - CRED.
    9. Karim Badr & Reham Rizk & Chahir Zaki, 2018. "Firm Productivity and Agglomeration Economies: Evidence from Egyptian Data," Working Papers 1239, Economic Research Forum, revised 15 Oct 2018.
    10. Marco Sanfilippo & Adnan Seric, 2014. "Spillovers from agglomerations and inward FDI. A Multilevel Analysis on SSA domestic firms," RSCAS Working Papers 2014/76, European University Institute.
    11. Nguyen, Huong, 2016. "Does Proximity to Foreign Invested Firms Stimulate Productivity Growth of Domestic Firms? Firm-level Evidence from Vietnam," Papers 1001, World Trade Institute.
    12. Elisa Calza & Micheline Goedhuys & Neda Trifković, 2019. "Drivers of productivity in Vietnamese SMEs: the role of management standards and innovation," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 28(1), pages 23-44, January.

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    Keywords

    clustering; productivity; endogenous location choice; spillovers; Vietnam;

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