Evolution of competition in Vietnam industries over the recent economic transition

Understanding the degree and evolution of competition across industries is an important step towards understanding the impact of economic reform and competition on economic growth in Vietnam during the economic transition. In this paper, we investigate evolution of competition in Vietnam during the economic transition using the Price-Cost Margin (PCM) or Mark-up that has been widely applied in the economic literature and the Profit Elasticity (PE) recently developed by Boone (2000). This paper provides the first empirical study of intensity and evolution of competition across selected industries in Vietnam in the last decade using firm-level data from the Vietnam Enterprise Census (VEC) conducted annually since 2000 by the Vietnam General Statistical Office (GSO).Competition, industry, economic transition, Vietnam

Labour Market Returns to Higher Education in Vietnam

This paper employs the Ordinary Least Squares, Instrumental Variables and Treatment Effect models to a new dataset from the Vietnam Household Living Standards Survey (VHLSS) to estimate return to the four-year university education in 2008. Our estimates reveal that the return to university education is about 17% (annualized) and robust to the various estimators. The return to higher education has significantly increased since the economic reform in late 1980s.economic transition; returns to higher education; IV model; Vietnam

Return to schooling in Vietnam during economic transition: Does return to schooling in Vietnam reach its peak?

A common phenomenon about transition economies is that the return to schooling improves as economic reform progresses. Existing research suggests that Vietnam is not an exception to the pattern. However, the rate of return in period from 1992 to 1998 is still relatively low, below 5 percent, relative to that of the world and other transitional economies. And it is hard to see a clear trend in the current literature due to different methods applied and sets of variables controlled in the earnings equations (see Appendix B). The low returns may result from the gradual economic reforms applied in Vietnam, whilst in Eastern European countries the “Big Bang” transformation was conducted. Therefore, to test whether the return to schooling in Vietnam is rising and reaches other transitional economies’ rate of returns, we re-examine the trend in the rate of return to schooling in Vietnam over the 1998-2008 period, when the reforms have had a longer time to have an effect. We apply the OLS and Heckman selection estimator (Maximum Likelihood approach) and find that the return has increased quickly during the later economic reform but its pace has slowed down when the return reached the global average rate of returns at somewhere between 9 and 10 percent.economic transition, returns to schooling, Vietnam

Do returns to schools go up during transition? The not so contrary case of Vietnam

A key stylized fact about transition economies is that the returns to schooling rise as economic reform progresses. Existing research suggests that Vietnam is an exception to this pattern, with a decrease in males’ return from 1992 to 1998, and little increase in the return to females’ education (Liu, 2006). This exception may be because of the gradual economic reform applied in Vietnam, whilst in Eastern European countries the “Big Bang” transformation was conducted. Therefore to see whether Vietnam is still a counter example, we re-examine the trend in the rate of return to schooling in Vietnam over the 1998-2004 period, where the reforms have had a longer time to have an effect

Return to schooling in Vietnam during economic transition: Does the return reach its peak?

A common phenomenon about transition economies is that the return to schooling improves as economic reform progresses. Existing research suggests that Vietnam is not an exception to the pattern. However, the rate of return for the period 1992-1998 is still relatively low, below 5%, relative to that of the world and other transitional economies. In addition, it is hard to see a clear trend in the current literature due to different methods applied and sets of variables controlled in the earnings equations (see Appendix B). The low returns may result from the gradual economic reforms applied in Vietnam, whilst in Eastern European countries the “Big Bang” transformation was conducted. Therefore, to test whether the return to schooling in Vietnam is rising and reaches other transitional economies’ rate of returns, we re-examine the trend in the rate of return to schooling in Vietnam over the 1998-2008 period, when the reforms have had a longer time to have an effect. We apply the OLS and Heckman selection estimator (Maximum Likelihood approach) and find that the return has increased quickly during the later economic reform but its pace has slowed down when the return reached the global average rate of returns around 10%.economic transition, returns to schooling, Vietnam

What determines credit participation and credit constraints of the poor in peri-urban areas, Vietnam?

This paper uses a novel dataset collected by the first author from peri-urban areas of Ho Chi Minh City, Vietnam in 2008 to examine how the poor use their loans, and factors affecting their credit participation and credit constraints. The paper finds the presence of many commercial banks in the areas does not help the poor, but the poor rely heavily on informal credit. Loans in the peri-urban areas are mainly used for non-productive purposes, which stresses the importance of consumption smoothing motives. Further, households in more rural wards have a higher probability of borrowing than more urban households, thanks to better community relationships and higher interpersonal trust. Competition by borrowing neighbours adversely affects the opportunity for borrowing in urban wards where the poor households’ borrowings rely much more on subsidized credit funds. A closer look at specified microcredit sources reveals that household behaviours differ in each market segment. Furthermore, the poor are highly credit-constrained. Wealthier households, in terms of asset holdings and phone possession, among the poor group appear less credit-constrained. However, except in the most rural part of the study area, the likelihood of credit constraints increases with distance to the nearest banks, which suggests that supply-side intervention could help in overcoming credit constraints. Overall, the poor in urban wards are more credit-constrained because of exclusion by commercial banks and weak interpersonal trust

Impacts of Household Credit on the Poor in Peri-urban Areas of Ho Chi Minh City, Vietnam

Access to credit is universally believed to be an effective tool to help the poor out of poverty. Yet the evidence for this has not considered all settings, especially the peri-urban areas of rapidly industrialising Asian countries. In these areas human capital is the main asset of the poor, so it is important to understand the input of credit on human capital. Therefore, this thesis begins with Chapter 2 showing the importance of human capital in income generation in Vietnam during the economic transition. The thesis then examines factors affecting credit participation and credit constraints for the poor in the peri-urban areas, and investigates whether credit participation impacts the poor’s education and healthcare spending and benefits their children’s schooling. Chapter 2 employs five large datasets of Vietnam Household Living Standard Surveys (VHLSS) conducted in 1998, 2002, 2004, 2006 and 2008 by Vietnam General Statistics Office (GSO) to examine the rate of return to schooling in Vietnam over the period of 1998-2008. The chapter finds that the rate of return has increased quickly during the recent economic reform and reached around 9-10 percent. The chapter clearly indicates an increasing importance of education in earnings during the later part of the economic transition in Vietnam. Therefore, human capital investment, including healthcare and education, is needed to help the poor escape poverty since they rely heavily upon labour income, especially in urban and peri-urban areas. One of the typical solutions to improve the poor’s human capital is to provide access to credit resources, however, there are many barriers blocking the poor’s access to credit. Chapter 4 uses a novel dataset collected by the author from peri-urban areas of Ho Chi Minh City, Vietnam in 2008 to examine how the poor use their loans, and factors affecting their credit participation and credit constraints. The chapter finds the presence of many commercial banks in the areas does not help the poor, who rely heavily on informal credit. Loans in the peri-urban areas are mainly used for non-productive purposes, which stresses the importance of consumption smoothing motives. Further, households in more rural wards have a higher probability of borrowing than more urban households, thanks to better community relationships and interpersonal trust. Competition by borrowing neighbours adversely affects the opportunity for borrowing in urban wards where the poor households’ borrowings rely more on subsidized credit funds. A closer look at specified microcredit sources reveals that household behaviours differ in each market segment. Furthermore, the poor are highly credit-constrained. Wealthier households, in terms of asset holdings and phone possession, appear less credit-constrained. However, except in the most rural part of the study area, the likelihood of credit constraints increases with distance to the nearest banks, which suggests that supply-side intervention could help in overcoming credit constraints. Overall, the poor in urban wards are more credit-constrained because of exclusion by commercial banks and weak interpersonal trust. Given that a sizeable fraction of the poor have participated in credit activities, there is a debate about whether microcredit has positive impacts on education and health for borrowing households. To provide evidence for this debate, Chapter 5 mainly uses the Propensity Score Matching (PSM) method to examine the impact of household credit on education and healthcare spending by the poor in the peri-urban areas. In addition to matching statistically identical non-borrowers with borrowers, my estimates also control for household pre-treatment income and assets, which may be associated with unobservable factors affecting both credit participation and the outcomes of interest. The PSM estimates show significant and positive impacts of borrowing on education and healthcare spending. However, multiple ordered treatment effect estimates reveal that only formal credit has significant and positive impacts, while informal credit does not have significant impacts. Whether the effects of credit are homogenous across distributions of outcome variables is another question of interest. This question asks whether the impact is the same along the outcome distribution, such as for households with already high consumption versus those with low consumption, or already high healthcare spending versus the low spenders. Chapter 6 employs a Quantile Treatment Effect estimator (QTE) and finds heterogeneity in the impacts on household budget shares for education and healthcare. Finally, household credit for the poor was examined and found to have a positive influence on current expenditure on education. However, to test whether the credit to the poor has longer term effects on education, in Chapter 7 there are results for estimating the impact of the credit on child schooling. Probit, Negative Binomial (NB) and PSM estimates roughly indicate no strong evidence of an effect, especially of informal credit, although formal credit may have a positive impact on child schooling

What determines credit participation and credit constraints of the poor in peri-urban areas, Vietnam?

This paper uses a novel dataset collected by the first author from peri-urban areas of Ho Chi Minh City, Vietnam in 2008 to examine how the poor use their loans, and factors affecting their credit participation and credit constraints. The paper finds the presence of many commercial banks in the areas does not help the poor, but the poor rely heavily on informal credit. Loans in the peri-urban areas are mainly used for non-productive purposes, which stresses the importance of consumption smoothing motives. Further, households in more rural wards have a higher probability of borrowing than more urban households, thanks to better community relationships and higher interpersonal trust. Competition by borrowing neighbours adversely affects the opportunity for borrowing in urban wards where the poor households’ borrowings rely much more on subsidized credit funds. A closer look at specified microcredit sources reveals that household behaviours differ in each market segment. Furthermore, the poor are highly credit-constrained. Wealthier households, in terms of asset holdings and phone possession, among the poor group appear less credit-constrained. However, except in the most rural part of the study area, the likelihood of credit constraints increases with distance to the nearest banks, which suggests that supply-side intervention could help in overcoming credit constraints. Overall, the poor in urban wards are more credit-constrained because of exclusion by commercial banks and weak interpersonal trust.Credit participation; credit constraints; the poor; peri-urban; Vietnam

Heterogeneous credit impacts of healthcare spending of the poor in peri-urban areas, Vietnam: Quantile treatment effects estimation

Quantile Treatment Effects are estimated to study the impacts of household credit access on health spending by poor households in one District of Ho Chi Minh City, Vietnam. There are significant positive effects of credit on the health budget shares of households with low healthcare spending. In contrast, when an Average Treatment Effect is estimated there is no discernible impact of credit access on health spending. Hence, typical approaches to studying heterogeneous credit impacts that only consider between group differences and not differences over the distribution of outcomes may miss some heterogeneity of interest to policymakers

Impacts of household credit on education and healthcare spending by the poor in peri-urban areas in Vietnam

There is debate about whether microfinance has positive impacts on education and health for borrowing households in developing countries. To provide evidence for this debate we use a new survey designed to meet the conditions for propensity score matching (PSM) and examine the impact of household credit on education and healthcare spending by the poor in peri-urban areas of Ho Chi Minh City, Vietnam. In addition to matching statistically identical non-borrowers with borrowers, our estimates also control for household pre-treatment income and assets, which may be associated with unobservable factors affecting both credit participation and the outcomes of interest. The PSM estimates of binary treatment effect show significant and positive impacts of borrowing on education and healthcare spending. However, multiple ordered treatment effect estimates reveal that only formal credit has significant and positive impacts on education and healthcare spending, while informal credit has insignificant impacts on the spending