Corruption and Growth: Private vs. State-owned Firms in Vietnam



We provide a firm-level analysis of the relation between corruption, growth, and public governance in Vietnam. We examine how corruption affects growth in a comparative analysis of private firms and state-owned enterprises, and how provincial governance factors influence corruption. Our results indicate that corruption significantly hinders the growth of Vietnam’s private sector. However, corruption is not detrimental for the growth in state sector. Our study highlights the role of local institutions and governance factors in affecting corruption. We present evidence that differences across provinces in regulatory entry costs, land access, the implementation and consistency of policies, and the private sector development policies can explain the severity of provincial corruption. Our findings underline the importance of within-country research to understand why and how corruption takes place, and suggest that the improvements in public governance quality should help to mitigate corruption and its adverse effects.
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Flora Pos