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Contents Introduction

This paper examines shares of foreign multinational corporations (MNCs), state-owned enterprises (SOEs), and other non-SOEs in Vietnam’s economy, and then compares the performance of these ownership groups in Vietnam using time series data for the 1990s and cross section data from the economic census for 1994-1995 and the industrial survey for 1998. During the 1990s, shares of foreign MNCs in Vietnam’s economy grew very rapidly as Vietnam succeeded in promoting large increases in inward foreign direct investment (FDI). Consistent with the theoretical suggestion that MNCs are supposed to possess relatively large amounts of firm-specific assets related to production technology, marketing networks, and management know-how, these results suggest that MNCs were generally larger and had higher labor productivity, capital intensity, wage levels, investment propensities, and trade propensities than non-MNCs. On the other hand, the economic census data suggest a weak tendency for the foreign MNCs to have relatively low capital productivity. State-owned enterprises (SOEs) also continue to play an important role during the transition to a market economy in the 1990s, while the role of local non-SOEs remained extremely limited, largely because systematic biases worked to their disadvantage. Somewhat contrary to a common view that SOEs tend to be relatively inefficient compared to non-SOEs, these results suggest that SOEs were generally much larger and had higher labor productivity, capital intensity, wage levels, and investment propensities. Compared to foreign MNCs, SOEs also tended to be larger, especially in terms of employment, but had lower labor productivity, wage levels, and investment propensities, while there were no significant differences observed in capital productivity.