Business environment and labor productivity: The case of the Vietnamese firms

Abstract

This paper examines the effects of the business environment on the labor productivity of Vietnamese manufacturing firms in the period of 2010-2018 using enterprise-level panel data drawn from Vietnamese Annual Enterprise Censuses and province-level surveys of the Provincial Competitiveness Index. Results show that in addition to traditional determinants, variables related to ease of business are found to contribute significantly to the labor productivity throughout the sample. The results support the arguments that Vietnam’s government policy in building a good business environment plays a crucial role in stimulating the economic growth, especially in terms of a broaden base for the economic development. Empirical studies about the in-depth effects of institutional changes on the labor productivity in the manufacturing industries will be fruitful research agenda.