Assessment of TFP change at provincial level in Vietnam: new evidence using Färe–Primont productivity index

Thanh Nguyen, Michel Simioni () and Dao Le Van
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Michel Simioni: UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - INRA - Institut National de la Recherche Agronomique - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier
Dao Le Van: University of Economics and Business

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Abstract: Vietnam has become a lower middle-income country in less than 30 years, and is now facing the middle-income trap risk. Knowledge of changes in total factor productivity (TFP) is an essential element in assessing this risk. An in-depth analysis of the evolution of TFP and its determinants in Vietnam is presented in this paper. TFP evaluation uses a recently proposed multiplicative-complete economically ideal index, namely the Färe–Primont index, to evaluate TFP and to decompose it into its different components: technical change, pure technical, mix and scale efficiencies. TFP is computed at the provincial level over the 2010–2017 period. The results shows that estimated provincial TFP values are, on average, small whatever the considered year, but they have increased with an annual compound growth rate of 3.46%. Technical progress as measured by TFP* appears to be the main driver of TFP growth over the period, with an annual compound growth rate of 3.34%. The expansion of the production set under constant returns-to-scale, from which TFP* is measured, is guided by movements of Ho Chi Minh city. Accordingly, on average, overall productive efficiency stagnated, with an annual compound growth rate of 0.12%. Technical efficiency has also stagnated over the period with its annual compound growth rate -0.62%. The results imply that there has been an increasing gap between provinces in terms of the resource allocation efficiency. This evolution may have negative consequences on sustainable economic development and lead the country into the risk of middle income trap in the future.

Keywords: total factor productivity; technical change; technical efficiency; färe-primont index; vietnam; mix and scale efficiencies (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-eff and nep-sea
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Published in The B.E. Journal of Economic Analysis and Policy Advances, 2019, 64, pp.329-345. ⟨10.1016/j.eap.2019.09.007⟩

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Journal Article: Assessment of TFP change at provincial level in Vietnam: New evidence using Färe–Primont productivity index (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02622869

DOI: 10.1016/j.eap.2019.09.007

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