PUBLICATIONS & REPORTS

Contents Introduction

This project was originally designed to examine the effects of ownership on exporting decisions of Vietnamese firms. However, as Chapter 1 clarifies, the firm export data have numerous problems that require further investigation before rigorous econometric analysis of how ownership affects firm exports will be possible. This project thus carefully examines two aspects of these data issues in Chapters 1 and 2. It also includes a related analysis of how trade protection can affect firm productivity in Chapter 3.

Chapter 1 examines patterns and changes of shares of the state sector, including stateowned enterprises (SOEs) and other state entities, and foreign multinational enterprises (MNEs) in Vietnam since the mid-1990s. Because most Vietnamese are still self-employed or household workers with little or no connection to the state sector or MNEs, it is important to exclude the household sector from these comparisons. First, ownership shares vary markedly among economic activities. For example, economy-wide estimates indicate that MNEs and state sector have both been relatively small employers, but larger producers. MNEs have also become by far the largest exporters. Second, ownership shares and their trends vary substantially depending on the data source. Most conspicuously, SOE shares of nonhousehold enterprise employment and sales have decreased rapidly since 2000. On the other hand, economy-wide estimates of state shares in non-household employment and GDP declined much more slowly. Recent discrepancies between these estimates have become so large that they almost certainly result from errors in one or more data sources. There are also smaller discrepancies between corresponding, alternative estimates of MNE shares. The extent of privatization of SOEs and its economic effects are thus ambiguous in Vietnam, creating important concerns for academics and policy makers.

Chapter 2 then examines how foreign multinational enterprises (MNEs) have grown in Vietnam’s manufacturing and trade industries, and tries to shed light on how MNE takeovers of Vietnamese firms have affected employment, and wages between 2000 and 2012. Although the scale of MNE activity has been substantial and grown in recent years, there are substantial discrepancies in measures of MNE shares from alternative sources and uncertainty over the actual share of MNEs in Vietnamese production or employment. On the other hand, the number of MNE takeovers has been very small and they appear to have played only a smallrole in changes of MNE shares. Rather, changes in MNE shares have resulted primarily fromthe entry and exit MNEs and changes in the scale of MNE activity.

Chapter 3 then investigates the how effective protection and firm ownership affected firm productivity in Vietnam during 2005-2010. In labour-intensive industries and industries with intermediate labour intensity, the level of effective protection in an industry had a significantly negative effect on firm productivity. Multinational enterprise (MNE) joint ventures (JVs) and state-owned enterprises (SOEs) had consistently higher productivity than private firms, with productivity usually being highest in JVs. Wholly-foreign MNEs (WOs) also had significantly higher productivity than private firms in 2005-2007, but lower productivity than JVs or SOEs, and in 2008-2010, WO-private differentials were insignificant. In capital-intensive industries, the pattern of productivity differentials (highest in JVs, followed by SOEs, WOs, and private firms) was similar in the earlier period, but not in the latter period or when all years were included in the sample. The level of effective protection also did not have a significant, independent effect on firm productivity in capitalintensive industries.