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Globalization and state capitalism: Assessing Vietnam's accession to the WTO

Baccini, Leonardo; Impullitti, Giammario; Malesky, Edmund J.

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Leonardo Baccini

Edmund J. Malesky


What do state-owned enterprises (SOEs) do? How do they respond to market incentives? Can we expect substantial efficiency gains from trade liberalization in economies with a strong presence of SOEs? Using a new dataset of Vietnamese firms we document a set of empirical regularities distinguishing SOEs from private firms. Then we empirically study the effect of the 2007 WTO accession on selection, competition, and productivity. Our results show that WTO entry is associated with higher probability of exit, lower firm profitability, and substantial increases in productivity for private firms but not for SOEs. Our estimates suggest that the overall productivity gains would have been about 40% larger in a counterfactual Vietnamese economy without SOEs. We highlight some economic mechanisms possibly driving these findings through the lenses of a model of trade with heterogeneous private and state-owned firms. The model suggests that political/regulatory barriers to entry and access to credit are key drivers of the different response of SOEs to trade liberalization. Further empirical tests broadly validate these insights.

Journal Article Type Article
Acceptance Date Feb 21, 2019
Online Publication Date Apr 30, 2019
Publication Date Jul 1, 2019
Deposit Date Dec 14, 2020
Publicly Available Date Dec 14, 2020
Journal Journal of International Economics
Print ISSN 0022-1996
Electronic ISSN 1873-0353
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 119
Pages 75-92
Keywords Economics and Econometrics; Finance
Public URL
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Additional Information This article is maintained by: Elsevier; Article Title: Globalization and state capitalism: Assessing Vietnam's accession to the WTO; Journal Title: Journal of International Economics; CrossRef DOI link to publisher maintained version:; Content Type: article; Copyright: © 2019 Elsevier B.V. All rights reserved.


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