Manufacturing productivity and firm ownership in a transition economy: Analytical issues and evidence from Vietnam

Author name: 
Prema-chandra Athukorala
Hai Thanh Nguyen

This paper contributes to the fledgling literature on firm ownership and manufacturing productivity in transition economies by drawing on the experience of Vietnam. The empirical analysis uses a new a new establishment-level panel dataset over the period 2006-2017. The findings indicate that the transformation of the ownership structure under trade and investment policy reforms has contributed significantly to improving the productivity of the manufacturing sector, with both fully owned subsidiaries of multinational enterprises (MNEs) and MNE joint ventures with domestic private sector firms playing a pivotal role. Productivity of fully-owned MNE subsidiaries is significantly higher than that of MNE joint ventures, supporting the view that relaxing ownership restrictions on foreign direct investment have been instrumental in improving manufacturing productivity. Both state-owned enterprises (SOEs) and MNE-SOE joint ventures are at the bottom of the productivity ranking, suggesting that the MNE-SOE joint ventures are not immune to productivity-retarding factors affecting SOEs.

Keywords: transition economies, Vietnam, manufacturing, multinational enterprises (MNEs), State owned enterprises (SOEs)

JEL Codes: F23, O14, P24, P23

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