The impact of governance and transparency on firm investment in Vietnam
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© 2015 The Authors. A large literature asserts a causal relationship between the quality of economic governance and economic performance. However, attempts to establish such a link at an aggregate level have met with considerable methodological criticism. This paper seeks to overcome this limitation. We match a panel of Vietnamese enterprises from 2006 to 2010 with a unique panel dataset measuring sub-national economic governance to estimate a relationship between local governance and private investment. We do not find a significant relationship between investment and most traditional forms of governance. However, there is one important exception - transparency, especially the public posting of planning documents, is strongly associated with higher investment across a range of different specifications. Our results have significant implications for policy, given the prevailing theory that changes in the quality of local economic governance will spur improved economic performance.
Published Version (Please cite this version)10.1111/ecot.12068
Publication InfoMalesky, Edmund; McCulloch, Neil; & Nhat, Nguyen Duc (2015). The impact of governance and transparency on firm investment in Vietnam. Economics of Transition, 23(4). pp. 677-715. 10.1111/ecot.12068. Retrieved from https://hdl.handle.net/10161/17735.
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Professor of Political Science
Malesky is a specialist on Southeast Asia, particularly Vietnam. Currently, Malesky's research agenda is very much at the intersection of Comparative and International Political Economy, falling into three major categories: 1) Authoritarian political institutions and their consequences; 2) The political influence of foreign direct investment and multinational corporations; and 3) Political institutions, private business development, and formalization.