Contribution to Vietnamese manufacturing sector’s aggregate TFP growth in the period 2007-2021

Tóm tắt

This research decomposes the contribution of surviving, entering, and exiting firms to aggregate total factor productivity growth of the Vietnamese manufacturing sector in the period 2007-2021 using the Melitz-Polanec method. The result indicates that the contribution by surviving firms has been the largest but tends to decrease in the research period. The contribution by exiting firms has a positive effect on the change in aggregate TFP because
exiting firms with low productivity will have to leave the market, and the process of resource reallocation will move towards enterprises with higher productivity. Meanwhile, entrants’ contribution to the change in aggregate TFP has been insignificant. To improve the contribution of firms to aggregate TFP growth, the government should create a competitive environment for
firms, making it easier for high-productivity firms to enter and survive in the industry.