Misallocation and Productivity: The Case of Vietnamese Manufacturing

Abstract

This paper attempts to measure the effect of resource misallocation on aggregate manufacturing total factor productivity, focusing on Vietnamese manufacturing firms during the period 2000–2009. One of the major findings of this paper is that there would have been substantial improvement in aggregate total factor productivity in Viet Nam in the absence of distortions. The results imply that potential productivity gains from removing distortions in Vietnamese manufacturing are large. We also find that smaller firms tend to face advantageous distortions, while larger firms tend to face disadvantageous ones. Moreover, the efficient size distribution is more dispersed than the actual size distribution. These results suggest that Viet Nam's policies may constrain its largest and most efficient producers, and coddle its smallest and least efficient ones.

Potential Growth, Misallocation, and Institutional Obstacles: Firm-Level Evidence

“…Those for the PRC and India tend to be more moderate, especially in the case of . Our measures of dispersion appear to be larger than those reported for the PRC and India by Hsieh and Klenow (2009) and by Ha and Kiyota (2015) for Viet Nam. For instance, for Viet Nam, Ha and Kiyota (2015) find a standard deviation of TFPR of 0.79, whereas we find (not reported) a value of 1.13.…”

Resource Allocation, Structural Change, and the Dynamics of Manufacturing Productivity in Indonesia

“…The misallocation literature is characterized by work such as that of Hsieh and Klenow (2009), who examine how resource misallocation lowers aggregate TFP in the cases of China and India. 1 This misallocation is also witnessed in Vietnam (Ha, Kiyota, and Yamanouchi 2016). Another emerging stream of literature, such as the work of Hayakawa, Matsuura, and Takii (2017), has used a more detailed plant-product-level dataset to examine the product quality issue for Indonesian exports.…”

Trade Liberalization, Market Share Reallocation, and Aggregate Productivity: The Case of the Indonesian Manufacturing Industry

“…Building on these three strands of studies, this paper quantifies the withinplant productivity improvement and market share reallocation in aggregate productivity growth in Indonesia and then investigates the impact of trade 1 One exceptional study is Ha and Kiyota (2015), which uses Vietnamese firm-level data and examines the impact of Vietnam's entry into the WTO on misallocation. Unlike our study, they use the method proposed by Hsieh and Klenow (2009), which is a cross-sectional decomposition technique.…”

“…One exceptional study is Ha and Kiyota (), which uses Vietnamese firm‐level data and examines the impact of Vietnam's entry into the WTO on misallocation. Unlike our study, they use the method proposed by Hsieh and Klenow (), which is a cross‐sectional decomposition technique.…”