State owned enterprises and capital misallocation in Vietnam

Bach, Thang Ngoc

doi:10.1080/13547860.2019.1616443

Cited by 9 publications

(5 citation statements)

References 4 publications

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“…In recent years, there have been a number of studies investigating the relationship between technological innovation, institutions, and firm productivity in the Vietnamese context. Specifically, Nguyen (2017) Nguyen and Freeman (2009) and Bach (2019) showed that the state-owned firm sector inhibits the development of the private firm sector and leads to the misallocation of capital. Ngo and Nguyen (2020) showed that tax incentives and government subsidies for exports have a positive impact on firm TFP.…”

Section: The Impact Of Innovation and Institutional Quality On Total ...mentioning

confidence: 99%

139 The impacts of technological innovation and institutional quality on the productivity of Vietnamese manufacturing firms

Dinh,

Nguyen,

Quach

et al. 2023

Int. j. adv. appl. sci.

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This research aims to assess the pivotal role of total factor productivity (TFP) in shaping the performance of manufacturing enterprises in Vietnam. It systematically examines the influence of technological innovation and the quality of economic institutions on the TFP of these firms. Employing robust methodologies such as control function (CF) and feasible generalized least squares regression (FGLS) models, a comprehensive panel dataset of Vietnamese manufacturing companies is meticulously scrutinized. The data, meticulously sourced from the General Statistics Office of Vietnam and the Vietnam Chamber of Commerce and Industry, spans the five-year period from 2015 to 2019. The findings of this study elucidate several key insights. First, it reveals that the manufacturing landscape in Vietnam is predominantly characterized by labor-intensive operations, with an apparent trend toward increasing returns to scale. Furthermore, the study underscores that TFP's contribution to manufacturing output remains relatively modest, averaging at 1.933 over the period from 2015 to 2019. Additionally, it identifies a concerning decline in the average TFP score, along with a widening gap between firms, which tends to exacerbate during the study period. Finally, the research establishes a positive correlation between investments in production technology and the quality of economic governance within provincial governments in Vietnam, both of which significantly bolster the TFP of manufacturing firms.

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Section: The Impact Of Innovation and Institutional Quality On Total ...mentioning

confidence: 99%

139 The impacts of technological innovation and institutional quality on the productivity of Vietnamese manufacturing firms

Dinh,

Nguyen,

Quach

et al. 2023

Int. j. adv. appl. sci.

View full text Add to dashboard Cite

show abstract

“…Song et al (2011) found that a key source of productivity losses was the misallocation of resources in manufacturing between private and SOEs in China. Bach (2019) used the general framework of Hsieh and Klenow (2009) to examine SOEs and capital misallocation in Vietnam, assuming away the presence of adjustment costs, uncertainty and other policy distortions.…”

Section: Related Literaturementioning

confidence: 99%

“…Second, this paper takes advantage of a rich firm‐level dataset to examine one specific type of policy distortions in Vietnam: preferential treatments of SOEs relative to non‐state firms (hereafter ‘state ownership policy’). Previous studies on the misallocation effect of state ownership policy, such as Bach (2019), have mostly examined this policy in isolation and failed to account for other sources of capital misallocation such as adjustment costs or uncertainty. To the best of the present author’s knowledge, this is the first paper to quantify the impact of state ownership policy distortions on aggregate TFP in the presence of other sources of misallocation.…”

Section: Introductionmentioning

confidence: 99%

Capital Misallocation and State Ownership Policy in Vietnam*

2022

Economic Record

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This paper examines capital misallocation of manufacturing firms in Vietnam during the period 2008–17. Three sources of capital misallocation are investigated: adjustment costs, uncertainty and policy distortions. The findings reveal the modest contribution of adjustment costs to total misallocation. In contrast, policy distortions account for 81 per cent of capital misallocation in Vietnam and lead to a total factor productivity gap of 110 per cent in the manufacturing sector relative to the undistorted first‐best level. The paper examines one specific type of policy distortions – preferential treatments of state‐owned enterprises – and finds that these policies cause a 38 per cent loss in aggregate manufacturing productivity.

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“…Previous studies on the misallocation effect of state ownership policy in Vietnam, such as Bach Ngoc Thang (2019), modeled capital misallocation effect as the difference between actual TFP and efficient TFP (when distortions are absent). Bach Ngoc Thang (2019) found that commercial and subsidized credit can reduce a capital distortion for all firms, but awarding more commercial and subsidized credit to the SOEs, compared to private firms, mitigates this reduction effect.…”

Section: Introductionmentioning

confidence: 99%

Capital diversion in Vietnamese state-owned enterprises

Le-Van,

Nguyen,

Nguyen

et al. 2023

FREP

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PurposeThe authors estimated the hidden overhead (capital diversion or wasteful use of capital) of Vietnam state-owned enterprises (SOEs).Design/methodology/approachThe authors used a panel data set of 10,200 Vietnam SOEs observed over the period 2010–2018. The authors modeled and estimated the hidden overhead by using a stochastic production frontier. The hidden overhead parameter is modelled as the technical inefficiency in the production function.FindingsVietnam SOEs are very capital intensive. The hidden overhead (or the wasteful use of capital) is very high with an average rate of 69%.Research limitations/implicationsAlternative estimation methods should be used to account for endogeneity in production inputs. Lack of comparison with the Vietnam private firms.Originality/valueThe paper proposes an original way to quantify hidden overhead (or capital diversion) in the Vietnam SOEs. The finding (a capital diversion rate of 69% on average) is astonishing. It calls for an urgent and profound reform of the Vietnam SOEs.

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State owned enterprises and capital misallocation in Vietnam

Cited by 9 publications

References 4 publications

139 The impacts of technological innovation and institutional quality on the productivity of Vietnamese manufacturing firms

139 The impacts of technological innovation and institutional quality on the productivity of Vietnamese manufacturing firms

Capital Misallocation and State Ownership Policy in Vietnam*

Capital diversion in Vietnamese state-owned enterprises

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