Productivity Loss and Misallocation of Resources in Southeast Asia

Francesca de Nicola, Ha Nguyen and Norman Loayza ()

No 9483, Policy Research Working Paper Series from The World Bank

Abstract: This paper examines within-sector resource misallocation in three Southeast Asian countries -- Indonesia, Malaysia, and Vietnam. The methodology accounts for measurement error in revenues and costs. The firm-level evidence suggests that measurement error is substantial, resulting in an overestimation of misallocation by as much as 30 percent. Nevertheless, resource misallocation across firms within a sector remains large, albeit declining. The findings imply that there are considerable potential gains from efficient reallocation -- above 80 percent for Indonesia and around 20 to 30 percent for Malaysia and Vietnam. Private domestic firms and firms with higher productivity appear to face larger distortions that prevent them from expanding.

Keywords: Food&Beverage Industry; Common Carriers Industry; Construction Industry; Business Cycles and Stabilization Policies; Plastics&Rubber Industry; Pulp&Paper Industry; Textiles; Apparel&Leather Industry; General Manufacturing; Industrial Economics; Economic Theory&Research; Economic Growth; International Trade and Trade Rules; Democratic Government; Public Sector Administrative and Civil Service Reform; De Facto Governments; State Owned Enterprise Reform; Economics and Finance of PublicInstitution Development; Public Sector Administrative&Civil Service Reform; Macroeconomic Management; Economic Forecasting; Governance Diagnostic Capacity Building (search for similar items in EconPapers)
Date: 2020-11-30
New Economics Papers: this item is included in nep-eff and nep-sea
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Productivity loss and misallocation of resources in Southeast Asia (2024)
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