Globalization and State Capitalism: Assessing Vietnam's Accession to the WTO

Baccini, L

Impullitti, G

Malesky, EJ

2018-12-10T03:32:25Z

2018-12-10T03:32:25Z

2017-08-28

2018-12-10T03:32:22Z

What do state-owned enterprises (SOEs) do? How do they respond to market incentives? Can we expect substantial efficiency gains from trade liberalization in economies with a strong presence of SOEs? Using a new dataset of Vietnamese firms we document a set of empirical regularities distinguishing SOEs from private firms. We embed some of these features characterizing SOEs operations in a model of trade with firm heterogeneity and show that they can hinder the selection effects of openness and tame the aggregate productivity gains from trade. We empirically test these predictions analyzing the response of Vietnamese firms to the 2007 WTO accession. Our result show that WTO accession is associated with higher probability of exit, lower markups, and substantial increases in productivity for private firms but not for SOEs. Domestic barriers to entry and preferential access to credit are key drivers of the different response of SOEs to trade liberalization. Our estimates suggest that the overall productivity gains would have been about 66% larger in a counterfactual Vietnamese economy without SOEs.

https://hdl.handle.net/10161/17729

Elsevier BV

CESifo Working Paper Series

state capitalism

state-owned enterprises

trade liberalization

heterogeneous firms

gains from trade

WTO

Vietnam

Globalization and State Capitalism: Assessing Vietnam's Accession to the WTO

Journal article

Malesky, EJ|0000-0001-5737-9195

6618

Trinity College of Arts & Sciences

Duke

Political Science