Labor productivity gap between export and non-exporting firms in industrialization: The case of the Vietnamese manufacturing sector

Nguyen, H.; Le, T.; Dang, T.; Nguyen, T.; Dang, T.; Le, V.

Growing Science » Accounting » Labor productivity gap between export and non-exporting firms in industrialization: The case of the Vietnamese manufacturing sector

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ISSN 2369-7407 (Online) - ISSN 2369-7393 (Print) Quarterly Publication Volume 6 Issue 4 pp. 509-524 , 2020

Labor productivity gap between export and non-exporting firms in industrialization: The case of the Vietnamese manufacturing sector Pages 509-524 Download PDF

Authors: Huu Trinh Nguyen, Thi Minh Thy Le, Thi Mai Huong Dang, Thanh Cuong Nguyen, Trung Dung Dang, Van Dai Le

DOI: 10.5267/j.ac.2020.4.007

Keywords: labor productivity, productivity gap, industrialization, The Manufacturing sector

Abstract: This paper examines the labor productivity gap between exporting and non-exporting Vietnamese manufacturing firms in industrialization during the period from 2010 to 2016 using enterprise-level panel data drawn from Vietnamese Annual Enterprise Censuses. Results show that the labor productivity of the manufacturing sectors increased during the study period. It can be concluded that the firms' productivity contributed to the current industrialization in Vietnam. On top of that, some manufacturing sectors with increasing labor productivity in the study period, namely: Fabricated metal products (code 25), Basic metals (code 24), Motor vehicles, trailers and semi-trailers (code 29), Computer, electronic and optical products (code 26), Leather and related products (code 15), Machinery and equipment not yet classified (code 28), Furniture (code 31), Electrical equipment (code 27), Other non-metallic mineral products (code 23), Other transport equipment (code 30), Wearing apparel (code 14), and Food products (code 10). Vietnam’s government policy might play a crucial role in stimulating the current industrialization by targeting selective manufacturing sectors. Decomposing labor productivity gap between export and non-exporting firms, the results show that labor productivity in the former is about 57.5 percent lower than in the latter. By using Oaxaca-Blinder decomposition method, several firm-level variables are found to contribute significantly to the productivity gap via the endowment effect and the structural effect. Overall, the endowment effect surpasses the structural effect in the sample period. Among the factor contributions, capital stock plays the most important role. Empirical studies about the impact of the related policy on the manufacturing industries will be fruitful research agenda.

How to cite this paper

 Nguyen, H., Le, T., Dang, T., Nguyen, T., Dang, T & Le, V. (2020). Labor productivity gap between export and non-exporting firms in industrialization: The case of the Vietnamese manufacturing sector.Accounting, 6(4), 509-524.

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