Does rising import competition harm local firm productivity in less advanced economies? Evidence from the Vietnam's manufacturing sector

Type Journal Article - The Journal of International Trade & Economic Development
Title Does rising import competition harm local firm productivity in less advanced economies? Evidence from the Vietnam's manufacturing sector
Author(s)
Volume 25
Issue 1
Publication (Day/Month/Year) 2016
Page numbers 23-46
URL http://econpapers.repec.org/article/tafjitecd/v_3a25_3ay_3a2016_3ai_3a1_3ap_3a23-46.htm
Abstract
This paper examines whether rising import penetration has an effect on the productivity of
domestic firms. The study uses data on a 10-year unbalanced panel of firms in the
manufacturing sector in Vietnam from 2000 to 2009. Panel and instrumental variable
methods are used to control for firm heterogeneity and endogeneity of import penetration. We
find significantly negative effects of import competition on local firms’ productivity. Further
investigation on the basis of firm size and industry technology levels shows that SMEs are
more adversely affected, but that industry technology level does not matter.

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