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Effects of Trade Liberalization on Non-farm Household Enterprises in Vietnam

Tran Quoc Trung () and Nguyen Thanh Tung ()
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Tran Quoc Trung: Ministry of Planning and Investment, 2 Hoang Van Thu, Ba Dinh, Vietnam
Nguyen Thanh Tung: International College of I.T and Management, 34B Han Thuyen, Hanoi, Vietnam

No 32, Working Papers from Development and Policies Research Center (DEPOCEN), Vietnam

Abstract: This paper evaluates multiple indirect effects of trade liberalization on performance and business behaviours of NFHEs during the transition period in Vietnam based on the industry and enterprise panel data. The paper shows that NFHEs in the benefited industries from trade liberalization had more opportunities to expand their operations or start up and were more likely to survive. However, this is only applicable for NFHEs in labour intensive and unskilled industries and the expansion of NFHEs in these industries did not go together with the improvement of their efficiency. On the other hand, NFHEs in the almost negatively affected manufacturing industries from trade liberalization had to face with the fiercer competition and many of them had to shutdown their operations. Nevertheless, the survived NFHEs had better and high performance and had more chance to become formal SMEs. We also find that the more openness and the lower tariff increased the NFHE income in the industry but these effects were not the same for NFHEs in different industries. There are some concerns for the future role and development of NFHEs in the face of increasing international competition in the market.

Keywords: Trade liberalization; Non-farm household enterprise; Panel data; Vietnam. (search for similar items in EconPapers)
JEL-codes: C23 F14 O12 O14 O24 O53 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2008
New Economics Papers: this item is included in nep-dev and nep-tra
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Citations: View citations in EconPapers (1)

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