Formal economic institutions are incentive-motivated mechanisms under the control of the government and are widely accepted as an important factor shaping investment behavior. However, the relative significance of aspects of formal economic institutions has remained ambiguous, especially in a developing economy like Vietnam. This paper aims to fill this gap through the investigation of the influence of formal economic institutions such as market entry, property right protection, anti-corruption mechanisms, and informal charges on private investment across provinces in Vietnam. The empirical results suggest that the deregulation of market entry is essential for private investment. By contrast, both property right protection and anti-corruption mechanisms have unexpected outcomes as their improvements are detrimental to private investment. The effect of informal charges is consistent with the prediction of the rent-seeking hypothesis.
One of the effects of exchange rate fluctuations is cross-border shopping by consumers. This paper provides an empirical analysis of the effects of Malaysian ringgit depreciation on cross-border shopping of Bruneians. This has been done by using daily data from 1 January 2014 to 31 December 2016 (total 1,096 observations) on traffic flows to Miri, a border town of Eastern Malaysia. We find that a 1 percent increase in the depreciation of Malaysian ringgit per Brunei dollar increases the number of Bruneian shoppers to Miri by 2.10 percent. We also estimated that the average spending per person per trip to Miri is B$155 and the total spending of Bruneian shoppers in Miri is $175 million a year. This total spending is 1.11 percent of gross domestic product of Brunei in 2016. The result from this study would be helpful in designing policies for cross-border shopping of Bruneians. This is because the number of visits and the total expenditure amount of Bruneians in Miri are related to high outflow of money which results in a loss to the local economy – which may deteriorate local business.