Journal Article Trade protection and productivity differentials between multinationals and local firms in Vietnamese manufacturing

Truong Thi Ngoc, Thuyen  ,  Juthathip, Jongwanich  ,  Eric D., Ramstetter

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This paper 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 capital-intensive industries.
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