Working Paper BETA #2019-36

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Title : Some Issues on the Vietnam Economic Growth. (Part of this manuscript, circulated as Le-Van C., Nguyen N.A., Nguyen N.M., Nguyen-Van P. (2023), "Capital diversion in Vietnamese state-owned enterprises", is published in Fulbright Review of Economics and Policy, Emerald Publishing Limited, available online: DOI: 10.1108/FREP-05-2023-001)

Author(s) : Phuong Le , Cuong Le Van , Anh Ngoc Nguyen , Ngoc Minh Nguyen , Phu Nguyen-Van , Dinh-Tri Vo

Abstract : We first consider the question of the productivity of the economy of Vietnam at the macro level. With theoretical models and empirical data, we find out the Leontief production function, and its associated TFP (Total Factor Productivity). We show that the TFP is one of the main engines of Vietnam economic growth. However when we move to the micro level with the capital productivity of 2,835 State Owned Enterprises (SOEs), we discover there exists an over utilization of the physical capital and more importantly, diversion of the capital stock. This diversion may be due to a waste of capital stocks or to a special form of bribery we call "hidden overhead". To summarize, economic growth in Vietnam my be enhanced by investing in the founding components of TFP such as new technology, Human Capital, better organisational system, but also by fighting the bribery and the over utilization of the physical capital.

Key-words : Productivity; Production Function; TFP; Hidden Overhead.

JEL Classification : E60, O11, 053, P21