Publication: The Effect of Local Governance on Firm Productivity and Resource Allocation: Evidence from Vietnam
Date
2017-01
ISSN
Published
2017-01
Author(s)
Tan, Shawn W.
Tran, Trang T.
Abstract
Governance quality plays a key role in
private sector development: competent bureaucrats not only
create good policies and regulations but also effectively
implement them to shape the business environment. The
authors exploit Vietnam’s decentralization of administrative
tasks since the early 2000s to test this hypothesis. The
authors examine how changes in the provincial administration
of national business regulations affect firms through two
channels: within firm productivity levels and resource
allocation across firms. Their results show that better
overall business environment has a positive impact on firm
productivity, and this effect is driven by a reduction in
corruption levels, the risks of land expropriation, and
entry regulations. The authors also find that high
productivity firms are generally more able to take advantage
of the improvements in business environment. However, better
implementation of entry regulations matters most for less
productive firms. The authors do not find evidence for the
impact of business environment quality on province-level
market efficiency.
Citation
“Tan, Shawn W.; Tran, Trang T.. 2017. The Effect of Local Governance on Firm Productivity and Resource Allocation: Evidence from Vietnam. World Development Report Background Paper;. © World Bank, Washington, DC. http://hdl.handle.net/10986/26200 License: CC BY 3.0 IGO.”