Journal of Asian Business and Economic Studies
Vol. 26(S01) , January 2019, Page **-**

Determinants of Firms’ Total Factor Productivity in Manufacturing Industry in Vietnam: An Approach of a Cross-Classified Model
Nguyễn Thị Hoàng Oanh

This study investigates the determinants of Total Factor Productivity (TFP) in manufacturing firms in Vietnam by the cross-classified multilevel model. This model enables the study to have a more proper estimation as well as make a clear distinction between firms, region-specific and sector-specific effects. This study combined a data set of Vietnamese manufacturing firms and sectoral variables from the annual data of Vietnam Enterprises Survey (VES), Technology Competitiveness Survey (TCS) and some regional variables on Province Competitive Index of General Statistics Office (GSO) in the period from 2011 to 2014. The study found that the main source of firms’ TFP heterogeneity is mostly originated from firm level. Besides, the interaction between regional (provincial) and sectoral factors also have a considerable contribution in TFP heterogeneity among firms. On firm level, both firm size and expenses on technology have significantly positive effects on firms’ TFP. Firms having exporting activities seem to have higher TFP than the others. On sectoral level, the concentration of sectors in a province may bring benefits to firms belonging to that sector in that province. On regional level, the high percentage of trained employees in a province has a significantly positive effect on firms’ TFP. More interestingly, the study also indicates that the concentration of sectors in a province may bring more benefits to firms located in the provinces with a higher percentage of trained employees.

Total Factor Productivity; Cross-classified multilevel models; Localized industry.