State-owned enterprises in Vietnam: Are they 'crowding out' the private sector?

Abstract

This article assesses, on a province-by-province basis, whether state-owned enterprises (SOEs) are constraining the development of private firms in Vietnam. The analysis suggests the greater the density of SOEs present in a province, the more they enjoy favouritism, the lower is the proportion of bank loans that go to private companies, and the longer it takes for private firms to get access to land. There is also a negative correlation between SOE growth and private sector growth. But most importantly, the greater the density of SOEs in a particular province, the lower the GDP (and GDP per capita) growth recorded by that province. This evidence suggests that SOEs are indeed 'crowding out' private companies in Vietnam. © 2009 Taylor & Francis.