The impact of governance and transparency on firm investment in Vietnam1. Issue 4 (31st March 2015)

• Record Type: Journal Article
• Authors: Malesky, Edmund; McCulloch, Neil; Nhat, Nguyen Duc
• Is Part Of: Economics of transition. Volume 23:Issue 4(2015:Oct.)
• Page Start: 677
• Page End: 715
• Publication Date: 2015-03-31
• Subjects: Europe, Eastern -- Economic policy -- Periodicals; Europe, Central -- Economic policy -- Periodicals; Capitalism -- Europe, Eastern -- Periodicals; Capitalism -- Europe, Central -- Periodicals; 338.9405
• DOI: 10.1111/ecot.12068
• Languages: English
• ISSNs: 0967-0750

Abstract

<abstract abstract-type="main" id="ecot12068-abs-0001"> <title>Abstract</title> <p>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.</p> </abstract>