Investment Climate and Efficiency of Vietnamese Manufacturing: What matters most?

NguyenBaTrung TV pdf Investment Climate and Efficiency of Vietnamese Manufacturing What matters most? Graduate School of Arts and Sciences International Christian University April 15, 2014 Nguyen Ba T[.]

Investment Climate and Efficiency of Vietnamese Manufacturing: What matters most? Graduate School of Arts and Sciences International Christian University April 15, 2014 Nguyen Ba Trung Investment Climate and Efficiency of Vietnamese Manufacturing: What matters most? A Thesis Presented to the Graduate School of Arts and Sciences, International Christian University for the Degree of Master of Arts Public Policy and Social Research Program April 15, 2014 Nguyen Ba Trung Approved by KAIZOJI, Taisei Thesis Advisor Acknowledgements This dissertation is the one “root” of two years that I have studied the master program in economics at International Christian University (ICU) Above all, I would like to express my deepest gratitude to Prof Kaizoji, the first advisor, for the kindness and the academic supports He spent lot of time every week to discuss my thesis and provisioned the invaluable comments through which the quality of this paper could be further improved I am particularly indebted to Prof Montgomery for the fruitful comments and suggestions, especially for the chance to attend the American Economic Association Conference through which I could gain the greatly valuable knowledge and experience I am especially appreciated to Prof Inaba for his encouragement and valuable comments For the chance of my study, I am particularly thankful to Japan International Cooperation Center (JICE) for two years scholarship and supports during the long time I have lived in Japan I would like to express the profound gratitude to the Graduate Department of the ICU, especially Ohno san for her kindness Last but by no means least, I would like to thanks to my family for almost unbelievable supports They are the most important people in my world, and I dedicate this thesis to them Table of contents CHAPTER INTRODUCTION CHAPTER THE LITERATURE OF INVESTMENT CLIMATE AND FIRM ECONOMIC PERFORMANCE 12 2.1 Infrastructure-Service and Firm Performance 14 2.2 Access to Finance and Firm Performance 15 2.3 Government Business Relation and Firm Performance 16 2.4 Human capital and Firm performance 21 CHAPTER EMPIRICAL METHODOLOGYAND INVESTERMENT CLIMATE MEASUREMENT 23 3.1 Empirical Methodology 23 3.2 Investment Climate Measurement 31 CHAPTER INVESTERMENT CLIMATE AND EFFICIENNCY OF THE VIETNAMESE MANUFACTURING 35 4.1 Vietnamese Manufacturing and investment climate 35 4.1.1 Infrastructure – Service 41 4.1.2 Government Business Relation 42 4.1.3 Human capital 44 4.1.4 Access to finance 45 4.2 The Vietnamese manufacturing and the explanation of the technical inefficiency 47 4.2.1 The individual indicator model in explaining the technical inefficiency of the Vietnamese manufacturing 49 4.2.2 The composite indicator model in the explanation of the technical inefficiency of Vietnamese manufacturing 61 4.3 What matters most? 71 CHAPTER CONCLUSION AND POLICY IMPLICATION 73 Appendixes 75 BIBLIOGRAPHY 82 List of Figures Figure Technical and Allocative Inefficiency 24 Figure The efficiency of the Vietnamese manufacturing in 2005-2009 37 Figure The ranking of the Vietnamese Investment Climate in comparison with other South-East Asia countries in 2012 39 Figure The main hindrances of the Vietnamese Investment Climate in comparison with other South-East Asia countries in 2012 40 Figure The FDI volume inflow of Vietnam in the period of 2009-2012 40 Figure Electric obstacles for doing business 41 Figure The percentage of the firms identifying the obstacles in infrastructure 42 Figure The percentage of the firms identifying the main obstacles in government regulations 43 Figure The level of the corruption in Vietnam across 2009-2011 44 Figure 10 The quality of the Vietnamese labor force in 2004-2005 44 Figure 11 The quality of firm managers in 2004-2005 45 Figure 12 The access to finance of the Vietnamese firm in 2004-2005 46 Figure 13 Why the firm did not need a loan in 2004- 2005 46 Figure 14 What the factor matters most to the firm efficiency 72 List of Tables Table The individual indicator model in the explanation of the technical inefficiency of the Vietnamese manufacturing 51 Table The individual indicator model in the explanation of the technical inefficiency by separate industries 55 Table The individual indicator model in the explanation of the technical inefficiency by separate industries 57 Table The individual indicator model in the explanation of the technical inefficiency by ownership types 59 Table Correlation between each composite variable and underlying variables 62 Table The composite indicator model in the explanation of the technical inefficiency of the Vietnamese manufacturing 64 Table The composite indicator model in the explanation of the technical inefficiency by separate industries 66 Table The composite indicator model in the explanation of technical inefficiency by industries 67 Table The composite indicator model in the explanation of the technical inefficiency by ownership types 69 List of Abbreviations CIEM: The Central Institute for Economic Management FDI: Foreign Direct Investment PCA: Principle Component Analysis SFA: Stochastic Frontier Analysis SOEs: State Owned Enterprises USD: The United States Dollar VCCI: Vietnam Chamber of Commerce and Industry VND: Vietnam dong (the Vietnamese currency) WTO: World Trade Organization List of Appendixes Appendix Principle Component Analysis 75 Appendix The statistical description of the Investment Climate and the Firm’ characteristics 78 Appendix Partial correlation 79