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How do Vietnamese SMEs perform? Technical efficiency of SMEs in the manufacturing sector and its sub-sectors

Conference Paper


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Abstract


  • This paper evaluates the technical efficiency performance of Vietnamese manufacturing

    small and medium enterprises (SMEs) over the period 2002 to 2007. Using firm level

    data from three surveys in 2002, 2005 and 2007 with a total of 5,204 observations of

    domestic non-state manufacturing SMEs the paper assesses the technical efficiency

    level of SMEs for the aggregate manufacturing sector and separately for nine subsectors

    including: (i) Food and Beverages; (ii) Textiles, Garments and Footwear; (iii)

    Electrical and Electronic Equipment (iv) Wood and Furniture Products; (v) Chemical,

    Rubber and Plastic Products; (vi) Paper, Printing and Publishing; (vii) Metal Products;

    (viii) Non-metallic Products; and (ix) Machinery and Equipment. Results from the

    estimation of a stochastic frontier production function, an econometric approach to

    evaluate technical efficiency, reveal that Vietnamese non-state manufacturing SMEs in

    aggregate have relatively high average technical efficiency. Their technical efficiency

    reached an average level of 89.71 percent for the three surveys in 2002, 2005 and 2007.

    They have mean technical efficiencies of 84.25 percent, 92.55 percent, and 92.34

    percent of the best practice frontier in 2002, 2005 and 2007, respectively. The results

    indicate that these firms can increase their current level of output by almost 15.7

    percent in 2002, by about 7.5 percent in 2005 and by 7.7 percent in 2007 with the same

    level of inputs. The sub-sector analysis shows that technical efficiency ranges from 70

    percent to 100 percent - or full technical efficiency, across sub-sectors in the 2002 –

    2007 period. It is found that the high-tech Electronics and Electrical Equipment subsector

    has the lowest mean technical efficiency level of around 80 percent for the three

    surveys. The low-tech Wood and Furniture sub-sector consistently performs with full

    technical efficiency. Although the period examined is limited to only 5 years, there is

    evidence that technical efficiency increased over the 2002 – 2007 period. The findings

    from this study provide empirically-founded policy recommendations to improve

    efficiency and competiveness of Vietnamese manufacturing SMEs.

Publication Date


  • 2010

Citation


  • Harvie, C. & Le, V. (2010). How do Vietnamese SMEs perform? Technical efficiency of SMEs in the manufacturing sector and its sub-sectors. Korea and the World Economy, IX (pp. 1-37). Korea: The Association of Korean Economic Studies, University of Incheon.

Ro Full-text Url


  • http://ro.uow.edu.au/cgi/viewcontent.cgi?article=3243&context=commpapers

Ro Metadata Url


  • http://ro.uow.edu.au/commpapers/2194

Start Page


  • 1

End Page


  • 37

Place Of Publication


  • http://www.akes.or.kr/akes/eng/conferences/conferences_02.asp

Abstract


  • This paper evaluates the technical efficiency performance of Vietnamese manufacturing

    small and medium enterprises (SMEs) over the period 2002 to 2007. Using firm level

    data from three surveys in 2002, 2005 and 2007 with a total of 5,204 observations of

    domestic non-state manufacturing SMEs the paper assesses the technical efficiency

    level of SMEs for the aggregate manufacturing sector and separately for nine subsectors

    including: (i) Food and Beverages; (ii) Textiles, Garments and Footwear; (iii)

    Electrical and Electronic Equipment (iv) Wood and Furniture Products; (v) Chemical,

    Rubber and Plastic Products; (vi) Paper, Printing and Publishing; (vii) Metal Products;

    (viii) Non-metallic Products; and (ix) Machinery and Equipment. Results from the

    estimation of a stochastic frontier production function, an econometric approach to

    evaluate technical efficiency, reveal that Vietnamese non-state manufacturing SMEs in

    aggregate have relatively high average technical efficiency. Their technical efficiency

    reached an average level of 89.71 percent for the three surveys in 2002, 2005 and 2007.

    They have mean technical efficiencies of 84.25 percent, 92.55 percent, and 92.34

    percent of the best practice frontier in 2002, 2005 and 2007, respectively. The results

    indicate that these firms can increase their current level of output by almost 15.7

    percent in 2002, by about 7.5 percent in 2005 and by 7.7 percent in 2007 with the same

    level of inputs. The sub-sector analysis shows that technical efficiency ranges from 70

    percent to 100 percent - or full technical efficiency, across sub-sectors in the 2002 –

    2007 period. It is found that the high-tech Electronics and Electrical Equipment subsector

    has the lowest mean technical efficiency level of around 80 percent for the three

    surveys. The low-tech Wood and Furniture sub-sector consistently performs with full

    technical efficiency. Although the period examined is limited to only 5 years, there is

    evidence that technical efficiency increased over the 2002 – 2007 period. The findings

    from this study provide empirically-founded policy recommendations to improve

    efficiency and competiveness of Vietnamese manufacturing SMEs.

Publication Date


  • 2010

Citation


  • Harvie, C. & Le, V. (2010). How do Vietnamese SMEs perform? Technical efficiency of SMEs in the manufacturing sector and its sub-sectors. Korea and the World Economy, IX (pp. 1-37). Korea: The Association of Korean Economic Studies, University of Incheon.

Ro Full-text Url


  • http://ro.uow.edu.au/cgi/viewcontent.cgi?article=3243&context=commpapers

Ro Metadata Url


  • http://ro.uow.edu.au/commpapers/2194

Start Page


  • 1

End Page


  • 37

Place Of Publication


  • http://www.akes.or.kr/akes/eng/conferences/conferences_02.asp