Private manufacturing SMEs survival and growth in Vietnam: The role of export participation

This study investigates for the first time a linkage between export participation and firm performance in terms of survival and profit growth in Vietnam. Using an unbalanced panel dataset from 2005 to 2009, our study shows no difference in the survival probability between exporters and non-exporters. By digging deeper to export status at different stages, the results indicate that continuous exporters have a positive association with probability of survival whereas export stoppers indicate a negative relationship. In terms of the relationship between firm growth and export activity, using Average Treatment Effects (OLS), export status is not related to firm profit growth. However, the Quantile Treatment Effects estimates reveal that export participation is positively and statistically significant associated with firms having profit growth above the median. The above findings might imply that exporting promoting policies, coupled with policies maintaining positions of firms in export market could be helpful since this may help firms improve their survival probability and profit growth

Export participation, employee benefits, and firm performance: The evidence from Vietnam’s manufacturing SMEs

Vietnam has seen a significant rise in the number of SMEs since introducing the Enterprise Law in 2000. Non-state SMEs are playing a key role in economic growth, creating jobs, and reducing poverty. However, these non-state SMEs participate only modestly in export activity despite the high export performance of the economy. What are the factors impeding export participation? And how does the role of export performance affect employee benefits (e.g. higher wages) and firm performance? This thesis is the first study to provide empirical evidence for answering these research questions. Chapter 3 investigates the causal relationship between export participation and productivity by examining two popular hypotheses, self-selection and learning by exporting. Using a balanced panel dataset from 2005-2009 for Vietnamese private manufacturing SMEs, the results show strong statistical evidence for the self-selection of more productive firms into the export market. The alternative hypothesis, learning by exporting, is shown to be invalid by employing a fixed-effect panel data estimation and a fixed-effect instrumental variable regression. This study also reveals that export participation has no impact on technical efficiency, technical progress, and scale change. Chapter 4 explores the role of export participation in increasing employee benefits in terms of wages and employment quality. First, based on a unique, matched firm-worker panel dataset between 2007 and 2009, the study shows that export participation has a positive impact on wages when taking into account only firm characteristics. However, the exporter wage premium falls and dissipates when both firm and worker characteristics are controlled for. In addition, the effect decreases further and becomes less significant when controlling for time-invariant, unobservable factors by a spell fixed-effect estimation. Second, using a firm level balanced panel dataset in the same period, the results show that there is a positive linkage between export participation and the share of casual workers. However, the effect of export participation on wages and employment quality varies greatly across sectors. Chapter 5 investigates linkages between export participation, firm survival and profitability in Vietnam. Using an unbalanced panel dataset from 2005 to 2009, the study shows no difference in survival probability between exporters and non-exporters. However, the probability of a firm’s survival is greater for those who engage continuously in export but is lower for firms which have ceased export activity, as indicated by their export status at different stages. Using ordinary least squares (OLS) to consider the relationship between firm profitability and export activity, the results indicate that export status is not related to firm profit growth. However, a quantile regression approach shows that export participation is positively related to profitability for firms with high profit growth but negatively related for those firms with low profit growth. This might suggest that the productivity advantages of exporters with low profit growth are absorbed by costs relating to trading activities in overseas markets. This thesis may have several potential policy implications. First, export promotion policies may not be effective if they are not accompanied by strategies to help SMEs become more productive. In addition, policies encouraging and supporting exports should focus not only on the number of employment created but also on the quality of employment, especially for low-technology industries. Finally, export-promoting policies (e.g. improvement in firms’ innovative activities) coupled with policies maintaining firms’ positions in export markets could be helpful since these measures in turn may help firms improve their survival probability and profit growth. However, the policy issues are very complicated and these suggestions should therefore be considered an initial foundation for further study

The impact of land fragmentation on household income: Evidence from rural Vietnam

Our study provides evidence that land fragmentation has negative consequences for household income, possibly because of its negative effects on crop income in ruralVietnam. Notably, using the Instrumental Variables (IV) method, we find that the negative effect is much greater after addressing the endogeneity of land fragmentation. IV analysis, therefore, suggests that a conventional approach which often uses the Ordinary Least Squares (OLS) method is likely to underestimate the impact of land fragmentation on rural households. Also, the finding implies that reducing land fragmentation would minimize its negative consequences for household income by reducing its negative effect on crop income

Firm exporting and employee benefits: first evidence from Vietnam manufacturing SMEs

This study examines linkages between the export participation of firms and employee benefits in terms of wages and employment quality. Based on a uniquely matched firmworker panel dataset for 2007 and 2009, we find evidence that export participation by firms in Vietnam has a positive impact on wages when taking into account firm characteristics alone. However, the exporter wage premium falls when both firm and worker characteristics are controlled for, and it decreases further when controlling for time-invariant unobservable factors by spell fixed effect estimation. While there are many studies on the export wage premium, the role of export participation on the quality of employment remains largely unexplored. By using a firm-level balanced panel dataset for the same period, our results suggest that export participation has a negative effect on employment quality. Nevertheless, the impact of export participation on both wages and employment quality vary greatly with respect to levels of technology

The impact of land fragmentation on household income: Evidence from rural Vietnam

Our study provides evidence that land fragmentation has negative consequences for household income, possibly because of its negative effects on crop income in ruralVietnam. Notably, using the Instrumental Variables (IV) method, we find that the negative effect is much greater after addressing the endogeneity of land fragmentation. IV analysis, therefore, suggests that a conventional approach which often uses the Ordinary Least Squares (OLS) method is likely to underestimate the impact of land fragmentation on rural households. Also, the finding implies that reducing land fragmentation would minimize its negative consequences for household income by reducing its negative effect on crop income

Does export participation affect wages and employment quality? the case of Vietnamese SMEs

Based on a unique matched firm-worker panel dataset between 2007 and 2009, empirical results show that export participation has a positive impact on wages when taking account of firm characteristics alone. However, exporter wage premium completely vanishes when both firm and worker characteristics are added simultaneously. This finding is also confirmed when controlling for time-invariant unobservable factors by spell fixed effect estimations. Furthermore, using a firm level balanced panel dataset in the same periods, the hypothesis of the positive role of export status on employment quality is rejected when it has a positive effect on the share of casual workers. However, this result is not robust across sectors and locations. Export participation continues to yield a positive impact on the share of casual worker in low tech sectors. However, a negative effect on employment quality is observed in high tech industries. The findings suggest that policies encouraging and supporting exporting should not only focus on the amount of employment created but also on the quality of employment, especially for low technology industries

Higher productivity in Exporters: self-selection, learning by exporting or both? Evidence from Vietnamese manufacturing SMEs

This study examines whether high productivity is either the cause or a consequence of a business’s decision to export. Using a balanced panel dataset from 2005-2009 for Vietnamese manufacturing private SMEs, our empirical results find strongly statistical evidence for the self-selection of more productive firms into the export market. The alternative hypothesis, learning by exporting, was shown to be invalid through employing fixed effect panel data estimation, and fixed effect Instrumental Variable regression. By going beyond the previous literature, this study also reveals that export participation has a statistically insignificant impact on technical efficiency, technical progress, and scale change. Last but not least, improvement in innovative capacity and network with foreign customers is also important determinants in boosting the export participation of private enterprises

Higher productivity in Exporters: self-selection, learning by exporting or both? Evidence from Vietnamese manufacturing SMEs

This study examines whether high productivity is either the cause or a consequence of a business’s decision to export. Using a balanced panel dataset from 2005-2009 for Vietnamese manufacturing private SMEs, our empirical results find strongly statistical evidence for the self-selection of more productive firms into the export market. The alternative hypothesis, learning by exporting, was shown to be invalid through employing fixed effect panel data estimation, and fixed effect Instrumental Variable regression. By going beyond the previous literature, this study also reveals that export participation has a statistically insignificant impact on technical efficiency, technical progress, and scale change. Last but not least, improvement in innovative capacity and network with foreign customers is also important determinants in boosting the export participation of private enterprises

Does export participation affect wages and employment quality? the case of Vietnamese SMEs

Based on a unique matched firm-worker panel dataset between 2007 and 2009, empirical results show that export participation has a positive impact on wages when taking account of firm characteristics alone. However, exporter wage premium completely vanishes when both firm and worker characteristics are added simultaneously. This finding is also confirmed when controlling for time-invariant unobservable factors by spell fixed effect estimations. Furthermore, using a firm level balanced panel dataset in the same periods, the hypothesis of the positive role of export status on employment quality is rejected when it has a positive effect on the share of casual workers. However, this result is not robust across sectors and locations. Export participation continues to yield a positive impact on the share of casual worker in low tech sectors. However, a negative effect on employment quality is observed in high tech industries. The findings suggest that policies encouraging and supporting exporting should not only focus on the amount of employment created but also on the quality of employment, especially for low technology industries