Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/171082 
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper No. 6618
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
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. We embed some of these features characterizing SOEs operations in a model of trade with firm heterogeneity and show that they can hinder the selection effects of openness and tame the aggregate productivity gains from trade. We empirically test these predictions analyzing the response of Vietnamese firms to the 2007 WTO accession. Our result show that WTO accession is associated with higher probability of exit, lower markups, and substantial increases in productivity for private firms but not for SOEs. Domestic barriers to entry and preferential access to credit are key drivers of the different response of SOEs to trade liberalization. Our estimates suggest that the overall productivity gains would have been about 66% larger in a counterfactual Vietnamese economy without SOEs.
Subjects: 
state capitalism
state-owned enterprises
trade liberalization
heterogeneous firms
gains from trade
WTO
Vietnam
JEL: 
F12
F13
F14
P31
P33
Document Type: 
Working Paper
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