Local Economic Governance and the Development of the Business Sector in Vietnam
Local economic governance plays an important role in the development of the business sector. To assess its impact on business sector growth in Vietnam, this empirical study is conducted at the local level with all 63 provinces nationwide in the period from 2006 to 2014. The Provincial Competitiveness Index (PCI) is used as a measurement for local economic governance. The finding reveals that overall the PCI has a positive effect on growth in the number of enterprises and output generated in the business sector. At the sub index level, 5 indicators show positive effects with labor training having the largest impact, followed by time costs of regulatory compliance, informal charges, transparency and finally business support service. Land access and security of tenure and proactivity of the provincial leadership unexpectedly show negative effects while the other 2 indicators, including entry cost for new firms and legal institutions, have no significant impact on business sector growth. Keywords Local economic governance, Provincial Competitiveness Index, business sector growth References [1] GSO Vietnam, Vietnam statistical yearbooks.[2] Abel, C. The Effect of Macroeconomic Variables on Profitability of Small and Micro Enterprises Industry in Nairobi County, 2014. [3] Irungu, S. and W.Muturi, "Impact of Macroeconomic Variables on Performance of Firms Quoted in the Energy and Allied Sector in the Nairobi Securities Exchange" International Journal of Education and Research 3 (2015) 10.[4] Gertler, M. and S. Gilchrist, "Monetary Policy, Business Cycles, and the Behavior of Small Manufacturing Firms" The Quarterly Journal of Economics 109 (1994) 2, 309 340.[5] Greenwood, R. "Evidence for a Debt Financing Channel in Corporate Investment" Unpublished working paper, Harvard Business School, Harvard, MA, 2003.[6] Bernard, B. Sare, Y. and A.Musah, "The Effects of Interest Rate on Micro, Small and Medium Enterprises Financing Decision in Wa Municipality of Ghana" International Journal of Business, Humanities and Technology 4 (2014) 4, 81 90.[7] Osoro, C. and W.Ogeto, "Macroeconomic Fluctuations Effects on the Financial Performance of Listed Manufacturing Firms in Kenya" International Journal of Social Sciences 12 (2014) 34 87.[8] Grambovas, C. and S. McLeay, "Corporate Value, Corporate Earnings and Exchange Rates: An Analysis of the Eurozone" The Irish Accounting Review 13 (2006) 65 83.[9] UNDP, A Users' Guide to Measuring Local Governance, 2009.[10] Bissinger, J. "Local Economic Governance in Myanmar" The Asia Foundation, No. 21 (2016)[11] Local Economic Governance: A Survey of Business Operators in 245 Districts /Municipalities in Indonesia, 2011.[12] Dixit, A. "On Modes of Economic Governance" CESifo Working Paper Series No. 589, 2001.[13] Wal, F. and T. Hilhorst, "The Role of Local Government in Stimulating Pro poor Economic Development: What and How?" retrieved on, 26 September 2007, p.2012.[14] Provincial Competitiveness Index (PCI) reports.[15] Hoechle, D. "Robust standard errors for panel regressions with cross sectional dependence" Stata Journal, 7 (2007) 3, 281.