The impact of governance and transparency on firm investment in Vietnam

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2015-10

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Abstract

© 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.

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10.1111/ecot.12068

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Malesky, E, N Mcculloch and ND Nhat (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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Malesky

Edmund Malesky

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.


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