First draft 15 March 2010

THE IMPACT OF THE ECONOMIC STIMULUS ON DOMESTIC,

PI!ATE ENTEPISES
1
Nguyen Ngoc Anh
Nguyen Duc Nhat
and
Nguyen Dinh Chuc
Development and Policies Research Center (DEPOCEN)


A"stract# In the year !!" and the #irst hal# o# !!$% the &orld &itnessed the un#olding
and heavy repercussions o# the glo'al #inancial crisis &hich a##ected (ietnam% among
others% through the reduction o# investments in#lo&% lo&er glo'al commodity prices and
trade) *he government o# (ietnam has acted +uic,ly &ith its stimulus pac,age% including
a -. interest rate su'sidy #or enterprises &ith the o'/ective o# preventing the economy
#rom #alling #urther) 0hile there are some anecdotal evidences a'out the e##ectiveness o#
the stimulus pac,age% there is no systematic evidence o# the impact o# the stimulus
pac,age) *his paper ma,es use o# the PCI !!" enterprise survey data% a uni+ue
dataset &hich is only recently made 'y availa'le to investigate the impact o# the -.
interest rate su'sidy component o# the stimulus pac,age) 0e #ind strong statistical
evidence that the -. interest rate su'sidy has positive and important impacts on the
enterprises% easing the severe e##ects o# the glo'al crisis)
$%&'(rds1 2lo'al #inancial crisis% #iscal stimulus% interest rate su'sidy% (ietnam)
*a'le o# content
1) Introduction))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))
) Impacts o# the glo'al #inancial crisis and government response)))))))))))))))))))))))))))))))))))3
3) Data% model and estimation results ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))4
-) Conclusion))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) $
Re#erences))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) 11

1
0e &ould li,e to than, the (ietnam Competitiveness Initiative ((NCI) #or ma,ing availa'le to us the PCI
!!$ enterprise survey data used in the statistical analysis in this paper) *he authors &ould li,e to than,
)))) #or help#ul comments and suggestion) *he opinion e5pressed in this paper is o# the authors only does
not necessarily re#lect that o# or is endorsed 'y (CCI% (NCI or DEPOCEN) Other usual disclaimer applies)
Corresponding author1 Nguyen Ngoc Anh% email1 ngocanh6depocen)org
FOR INTERNAL DISUCSSION ONLY DOT NOT CIRCULATE
First draft 15 March 2010
1* I+tr(d,cti(+
*o date% the contagious impacts o# the glo'al #inancial crisis have 'een #elt in all
continents as &ell as most nations) 7eing a small open% 8DI9reliant and e5port9
dependant economy% (ietnam has not 'een spared #rom this e5ternal shoc, &hich &as
transmitted to the (ietnam economy in the late o# !!") :onthly e5port dropped
successively in the last months o# !!" and early !!$) 8oreign direct investments
declined signi#icantly) Consumer sentiment &as adversely a##ected and the stoc, mar,et
inde5 ,ept #alling) *he situation deteriorated #urther in early !!$ &hen the 2DP gro&th
rate in the #irst +uarter &as only 3)1. and #or the #irst hal# !!$ it &as only 3)$. as
compare &ith the annual average o# ;.) As the situation &orsened% li,e most o# the
governments in the Asia region and around the &orld% the government o# (ietnam has
acted +uic,ly% easing 'oth monetary and #iscal policies) In particular% the government
reverses the course o# monetary tightening and #iscal austerity policy implemented in
!!" &hen the economy overheated and put in place a large #iscal stimulus pac,age) At
the moment% it seems that the e5pansionary policy has &or,ed)

*he 2DP gro&th

increased to ;);. in the #ourth +uarter o# !!$% #rom the 3)1. level registered in the #irst
+uarter% -)-. and 4). in the second and third +uarters)
Pursuing such an e5pansionary policy puts e5tra9ordinary pressure on the economy and
it is unclear ho& much longer the current e5traordinary stance o# monetary and #iscal
policies could 'e maintained)
3
2iven the #ragility o# the situation% a premature &ithdra&al
o# stimulus could cause recovery to halt< at the same time% the continuation o#
e5pansionary macroeconomic policies could also raise in#lationary and de't
sustaina'ility concerns) *here#ore% evidence o# the e##ectiveness (or other&ise) o# the
stimulus program could not only provide an important input #or practical policy decision
ma,ing 'ut also lessons #or #uture policy design) In this paper% &e investigate the impact
o# the interest rate su'sidy component o# the stimulus pac,age using a uni+ue micro9
level data% the PCI #irm survey data) In particular% &e investigate i# the interest su'sidy
assists #irms in their operation and investment) *he paper is organi=ed as in - sections)
*he #ollo&ing section discusses 'rie#ly the impact o# the glo'al crisis and the responses
adopted 'y the government) >ection 3 discusses the model% data% and empirical strategy
&hile section - presents the estimation results) >ection 4 concludes
2
>ee the 0orld 7an, (!!$) and see http1??vi'#orum)vcci)com)vn?ne&s@detail)aspAne&s@idB1"3!
3
In addition% implementing such e5pansionary entails some element o# uncertainty as trade de#icit ,eeps
rising and there are some signs o# in#lation coming 'ac,)
FOR INTERNAL DISUCSSION ONLY DOT NOT CIRCULATE
First draft 15 March 2010
2* I-.acts (f th% /0("a0 fi+a+cia0 crisis a+d /(1%r+-%+t r%s.(+s%
7eing more deeply integrated into the regional and &orld economy% (ietnam 'ecomes
more vulnera'le to e5ternal shoc,s and crises)
-
Cp to the #irst hal# o# !!" (ietnam &as
relatively una##ected 'y the #inancial turmoil) *he #inancial and economic environment
&orsened in #inal +uarter o# !!" and #irst +uarter o# !!$) Real 2DP gre& only 3)1. y9
o9y in the #irst +uarter o# !!$ compared to the average o# ;)4. o# the #irst +uarter o#
!!") *he industrial production gro&th &as only at )$. in the #irst +uarter o# !!$)
Table 1: Recent Export and Import performance
Value (US$ million,
200! "ro#t$ (in percent!
2008 10M-08 10M-09
Total export
earnin%& 62,685 29.1 36.7 -13.8
Crude oil 10,357 22 43.2 -43
Non-oil 52,328 30.6 35.4 -7.6
Total import 'alue 80,714 28.8 42.6 -21.7
Source: World Ban, !S"
7oth (ietnamDs e5port and 8DI in#lo&s &ere severely a##ected) In the #ourth +uarter o#
!!"% (ietnamDs e5port #ell signi#icantly due to the direct and immediate impacts o# the
glo'al #inancial crisis) According to o##icial statistics #rom 2>O% over the #irst ten months
o# !!$% (ietnamese e5ports declined 'y 13)" percent compared to !!")
4
In !!$%
there has 'een a slo&do&n in the in#lo&s o# #oreign direct investment resulted #rom the
constraints o# disposal capitals and the tightening o# the &orld credit mar,et)
E
In the #irst
" months o# !!$% (ietnam has managed to attract a'out C>F 1!)- 'illion o# registered
capital much lo&er than !!") *he actual dis'ursement #rom investment pro/ects is over
C>F E)4 'illion also lo&er than !!")
4
As pointed out 'y Nguyen et al (!!$) although the country has &itnessed strong domestic consumption
gro&th in recent years% (ietnamDs economy has continued to 'e driven 'y high e5ternal trade and increased
#oreign direct investment (8DI))
5
*his crisis e5posed the vulnera'ility o# (ietnamDs e5port dependent gro&th on the &orld mar,et) E5port9
dependent countries li,e (ietnam su##ered disproportionately #rom a collapse in international trade) *he
aggregate #igure concealed the real situation) *his is 'ecause although some o# (ietnam ma/or e5port
products such as co##ee% rice% pepper% ru''er% crude oil and coal% report increases in volume in !!$% their
decreased prices have led to the speculation that (ietnam may not 'e a'le to meet this revised gro&th rate)
6
In !!"% there &as a large in#lu5 o# 8DI into (ietnam reaching C>F E- 'illion o# registered capital (tripled
the registered 8DI capital #or !!;) and C>F 11)E 'illion o# implementation capital (compared &ith C>F "
'illion in !!;)) All along the course o# economic re#orm up to no& (ietnam has relied more and more on
8DI to sustain its high level o# economic gro&th) *he slo&do&n o# 8DI in#lo&s in !!$ and the years to come
&ill have serious conse+uences #or (ietnam as the 8DI sector plays an important role in (ietnamDs e5port)
3
First draft 15 March 2010
*he government o# (ietnam &as +uic, to notice the impact o# the glo'al crisis and
responded +uite decisively)
7
*he government reversed the course o# monetary tightening
and #iscal austerity policy implemented in !!") In terms o# #iscal policy% the government
initially announced its #iscal stimulus pac,age valued at C>F E 'illion &hich &as later
revised to 'e C>D " 'illion)
8
*he pac,age includes a num'er o# components% such as
ta5 'rea,s and pu'lic investments #or in#rastructure% social trans#er and interest su'sidy)
Details o# the pac,age are presented in *a'le )
Ta"0% 2 !i%t+a-2s Fisca0 sti-,0,s -%as,r%s
N(* P(0ic& -%as,r%s A-(,+t
1 Interest su'sidy (ND 1;!!! 'illion
>tate Development investment (ND $!"!! 'illion
3 *a5 holiday and e5emption (ND "!!! 'illion
- Other spending #or social security and
economic do&nturn prevention
(ND $"!! 'illion
T(ta0
(ND 1-4E!! 'illion
(e+uivalent to C>D " 'illion)
>ource1 Report 'y the 2overnment to the National Assem'ly (!!$)
One o# the peculiar #eatures o# (ietnamDs stimulus pac,age is the interest rate su'sidy
program &hich has received 'oth criticism and praise) *he program started in April !!$
and has 'een e5pected to have had a +uic, ,noc,9on impact) *he interest su'sidy%
&hich &as made availa'le until the end o# year !!$% su'sidi=es a - percent portion o#
the interest payments imposed on medium to long9term loans #or t&o years) 7y the end
o# !!$% the government announced to e5tend the interest rate su'sidy program 'ut
lo&ers the su'sidy to percent) It is this interest su'sidy component is the #ocus o# our
paper% and the results o# our study &ill contri'ute to the de'ate on the continuation o# the
second pac,age)
*ogether &ith the glo'al recession 'ottoming9out% signs o# economic recovery #or
(ietnam could 'e seen as early as August !!$ &ith industrial production and 2DP
7
In light o# these events% the government has recently revised do&n&ards its 2DP gro&th #orecasts #or
!!$% #rom ;)4 percent to E)4 percent) *he e##ectiveness o# the #iscal stimulus pac,ages that countries%
developed and developing ali,e% are implementing has 'een +uestioned 'y 8oster (!!$)
http1??&&&)heritage)org?Research?Economy?'g3!)c#m
8
*he stimulus pac,age is supposed to aim at 'oosting investment and consumption% mitigating the impact
o# the glo'al #inancial and economic crisis on the (ietnamese economy and its people% and preventing a
general slo&do&n o# economic activity) 8or e5ample% the stimulus pac,age includes one9o## support o# (ND
!!%!!! per person #or the poor on the last occasion o# Ne& Gear Holiday< a reduction o# 3! per cent o#
corporate income ta5% an e5tension o# nine months #or the su'mission o# !!$ ta5 paya'les and a
temporarily re#und o# $! per cent o# (A* #or e5ported goods &ith I/usti#ia'le payment documentsJ% personal
income ta5 e5emption #or the #irst E months o# !!$ and -. interest su'sidy 'eing e5tended to longer9term
loans o# up to years #or investment in agriculture and other productive activities)
4
First draft 15 March 2010
gro&th pic,ed up in the third +uarter o# the year)
$
Although the economic recovery is in
(large) part due to the revival o# e5ternal demand #or (ietnamDs e5port and resumed 8DI
in#lo&s% it is commonly 'elieved that the policy adopted 'y the government &or,ed in
helping the economy through the recession) According to a report 'y 2>O (!!$)%
together &ith the recovery in other Asian countries% the prospect o# (ietnamDs economy
&as improving and some attri'uted such recovery to government stimulus policy)
1!
0hile
there has 'een &ide spread agreement that the prompt introduction o# the stimulus
pac,age provided some +uic, protection #or the economy% there remains some de'ate
around &hether or not the pac,age &as a'le to target the most e##ective 'usinesses and
sectors and evaluating the impact the government stimulus pac,age is a daunting tas, in
the a'sence o# relia'le data)
3* Data, -(d%0 a+d %sti-ati(+ r%s,0ts
3*1* Data
In this paper &e employ a uni+ue dataset% the #irm level survey data collected in !!$
11
'y (ietnam Competitiveness Initiative ((NCI)) In the conte5t o# patchy evidence o# the
impact o# the stimulus pac,age% the (NCI enterprise survey data provides a uni+ue
opportunity to e5amine the impact o# the interest su'sidy on enterprises at the micro9
level) In ,eeping up &ith the dynamism o# the economy% the PCI !!$ +uestionnaire
incorporated a #e& more 'ut important +uestions that allo& us to investigate the impact
o# the interest su'sidy program o# the government) *he +uestionnaire as,ed i# the
enterprises could Iget access to the special interest loan that belongs to the stimulus
packageJ and i# that is Ithe special interest loan of 4% of the GovernmentJ) Detailed
description o# varia'les used in our statistical analysis is presented *a'le 3)
3*2* Th%(r%tica0 c(+sid%rati(+
>purred 'y the introduction o# government interest rate su'sidies% gro&th o# credit and
money supply accelerated in the #irst hal# o# !!$) *he gro&th o# total li+uidity (:)
increased to 34)". in the second +uarter !!$ #rom !)3. in the #ourth +uarter o# !!")
*he gro&th o# li+uidity and credit% ho&ever% &as relatively modest during the #irst +uarter
o# !!$ due to some lag) As time passes% the economic activities get more and once the
9
http1??&&&)vneconomy)vn?!!$!""!$1!4-1P!C1!?,inh9te9"9thang9'uc9tranh9dang9sang)htm
10
http1??vneconomy)vn?!!$!$!11!;1E1;"P!C4?he9mo9,ha9nang9tao9'uoc9dem9cho9nen9,inh9te)htm
11
8urther in#ormation a'out (NCI% PCI and related materials can 'e #ound at the #ollo&ing &e'site
http1??&&&)pcivietnam)org?a'out@pci)php
5
First draft 15 March 2010
determination o# the government to 'oost gro&th rates 'ecame clear% 'an, lending
pic,ed up again) *here#ore% it can 'e argued that the most o'vious impact o# the
stimulus pac,age implemented 'y the government may 'e in ,eeping the credit to #lo&
to the economy and assisting enterprises to clean up their 'alance sheet 'y replacing
the high interest 'earing loans &ith su'sidi=ed loans) *his reduced the #inancial 'urden
o# 'orro&ing 'y easing costs during a period o# economic pressure and ena'led
'usinesses to maintain production and /o's) >uppose that a #irmDs production #unction is
given 'y
q = f(l, k; m) (1)
&hen q is output% l is la'our% k is capital% and m is the managerial input (see% e)g)%
7haumi, and Estrin% !!3)) Cost minimi=ation% &hich is the dual o# pro#it ma5imi=ation%
yields the la'our demand #unction
l B g(&% r% p% +(m)) ()
&hen w is the &age rate% r is the rental rate o# capital% and p is the price o# the #inal
product) Economic theory suggests that
p l /
and
q l /
are 'oth positive and
r l / is negative) *hat is% i# there is a gro&th in sales% &hether due to an increase in p
or 'ecause o# an increase in q% or reduction in the cost o# doing 'usiness% r (cost o#
capital)% and the demand #or la'our is li,ely to increase) *o operationalise the a'ove
model #or demand% &e estimate the #ollo&ing empirical model1
+ + + = Subsidy X Labour
1 0
(3)
&here Labour is a measure o# demand during the year !!$% K is a vector o# #irmDs
characteristics such as capital% regional dummies% sector dummies% o&ner education%
and is an error term% and #inally su'sidy in (3) is an indicator #or receiving interest rate
su'sidy 'y the government under its stimulus pac,age) *he parameter i# estimated
properly &ill let us ,no& the impact o# the interest su'sidy under the government
stimulus pac,age) Ho&ever% direct estimation o# the e+uation (1) a'ove &ould lead to
'iased impact due to the potential endogeneity o# the ubsi!" varia'le causing possi'le
correlation 'et&een su'sidy and the error tem ) *he endogeneity and 'iased estimation
6
First draft 15 March 2010
is caused 'y the #act that the su'sidy program is not implemented 'y randomi=ation
&here participants in the program are selected in a random manner) Instead% there are
t&o potential pro'lems (i) speci#ic re+uirement o# the program and (ii) sel#9selection o#
individuals into the program 9 some enterprises &ho may select themselves into the
program) *here are a num'er o# approaches to deal &ith the issue o# endogeneity) A
common approach in the literature to deal &ith the endogeneity is the instrumental
varia'le (I() approach) *he 'asic idea o# the I( approach is to #ind varia'les that are
highly correlated &ith ubsi!" 'ut not &ith the error term% L%MM in the la'our demand
e+uation (3) a'ove) Csually% a #irst9stage e+uation is speci#ied #or ubsi!" as #ollo&1
u Z Subsidy + =
(-)
&here N is the vector o# instruments) *he di##icult part o# the I( approach is to identi#y
appropriate instruments) Our strategy is to use the #itted value o# >u'sidy o'tained a#ter
estimating e+uation (-) as the instrument in e+uation (1)) As ubsi!" measured in (-) is
a 'inary varia'le% using #itted pro'a'ilities #rom the #irst stage 'inary response model as
an instrument is a good strategy) 0ooldridge (!!% pp) E39E4) points out that the
standard error and test statistics are asymptotically valid and that even &hen e+uation
(-) is not correctly speci#ied% the #itted pro'a'ilities can still 'e used as an instrument
&hen N is partially correlated &ith ubsi!")
*he e5clusion restriction o# the I( approach re+uires that the instruments a##ect selection
into program 'ut is not correlated &ith #actors a##ecting the outcomes) In our empirical
analysis% &e use t&o varia'les% namely i# the enterprises have land use right certi#icate
(landcert) and i# the o&ner o# enterprises 'elong to 'usiness associations (mem'er))
Oand certi#icate can 'e used as collateral #or securing loans #rom 'an,s and &ould not
a##ect the decision 'e enterprises to employ% maintain or #ire their employees) >econdly%
mem'ership o# the 'usiness association is a pro5y #or social net&or, that may help #irms
in getting in#ormation a'out the -. interest rate su'sidy% and get easier access to the
loans) Ho&ever% social net&or,% in our opinion &ould not a##ect the decision to employ or
#ire employees) *here#ore% &e use these t&o varia'les as instruments in our analysis) As
usual% &e also su'/ect our choice o# instruments to statistical tests o# endogeneity and
over9identi#ication)
7
First draft 15 March 2010
3*3 Esti-ati(+ r%s,0ts a+d disc,ssi(+
Our estimation results are presented in *a'le -) In panel A% &e present the results
o'tained #rom the OO> model #or re#erences) In panel 7% &e present the results #rom the
I( approach) *he model is estimated 'y the #amiliar t&o9stage least s+uare method) *he
#inal panel C% &e present the results #rom the #irst stage regression) 7e#ore &e turn out
attention to the main results o# the I( model% &e discuss the estimation results o# the #irst
stage e+uation and I( statistical tests) *here are a num'er o# interesting #indings in
panel C o# *a'le -) 8irst% consistent &ith the economic literature% large #irms ('igger
e+uity capital and large num'er o# employees) are more less credit rationed and thus
more li,ely to o'tained credits and thus su'sidy) >econdly% land certi#icate and
mem'ership in 'usiness association are important #actors #or #irm to o'tain loan and
su'sidy) *hirdly and very interesting is the #inding that e5porting #irms are more li,ely to
o'tain credits and su'sidi=ed loan #rom 'an,s) 8inally% it seems that enterprises &or,ing
mainly in the service and agriculture sectors are more li,ely to o'tain the su'sidy loan
than #irms in manu#acturing sector)
0ith respect to the t&o9stage least s+uare model% the estimated results indicate that our
instruments pass the endogeneity and over9identi#ication tests)
1
*he varia'le o# interest
is the su'sidy varia'le) Our estimation indicates that on average enterprises that
o'tained interest rate su'sidy increased their employment 'y appro5imately $ &or,ers)
*he estimated result is statistically signi#icant at a reasona'le level) *he result o'tained
#rom our analysis suggest that in addition to helping #irms to access to the necessary
credit% the -. interest rate su'sidy component does create employment #or social
protection purposes) In order to provide more meaning#ul discussion to the estimated
#igure% &e do some +uic, 'ac,9o#9the9envelop calculation) According to some report% 'y
the third +uarter o# !!$% there &ere ;"%433
13
enterprises that 'ene#ited #rom the -.
interest rate su'sidy pac,age o# &hich a'out "E. are non9state o&ned enterprises
1-
)
*his may suggest that a ma5imum o# a'out E;%4!! non9state enterprises are covered 'y
the interest rate su'sidy scheme) Ho&ever this num'er can not suggest an e5act
#raction o# non9state #irms and it also cover a num'er o# the households &hich in
unidenti#ied) Our estimated parameter suggests that non9state #irms &ho receive the
12
0e cannot re/ect the null hypothesis o# e5ogeneity and identi#ication)
13
#$$%:&&'necono().'n&20090708121345190*0C10&#on+-co-c#u)en-ca$-+ia(-+oi-ic#-cau.#$(
14
,ccordin+ $o !o'ern(en$-. re%or$ $o $#e Na$ional ,..e(/l)
8
First draft 15 March 2010
interest rate su'iidy create averagely $ /o' vacacies) *his &ould translate into serveral
hundred thousands ne& /o's given the num'er o# private #irms under the scheme could
'e identi#ied) In the conte5t o# the glo'al crisis &hich /o' loss are inevita'le due to
decline in e5ports% and the in#lu5 o# ne& la'our mar,et entry to the order o# 1)4 million
per year #or (ietnam% it is #air to say that the su'sidy pac,age has done a good /o' in
terms o# social protection) 2iven C>D 1 'illion ((ND 1; thousand 'illion) spent 'y the
government on the su'sidy component and some hundred thousand ne& /o's &ere
created) *o provide reader &ith some picture o# su'sidy impact on employment% in the
e5treme case that most o# the E;%4!! recipients are private #irms% the num'er o# ne&ly
created /o's 'y the su'sidy could reach E!!%!!!) *he +uestion o# &hether the amount is
&ell9spent &ould deserve another research paper and #alls outside the scope o# this
study) Ho&ever% &e still 'elieve that some e##iciency evaluation may 'e needed)
4* C(+c0,si(+
In !!"% as the glo'al #inancial crisis un#olds &ith the severe impacts the economy is
&eathering the glo'al economic crisis +uite &ell) E5perience sho&s that engineering a
good stimulus pac,age that is timely% &ell targeted and #iscally sustaina'le is not an
easy tas, as sho&n 'y the still ongoing de'ates on the stimulus pac,age) In retrospect%
it appears that the government o# (ietnam chose an e##ective mi5 o# stimulus measures)
*he rapid loosening o# monetary policy% together &ith the #irst phase o# the interest rate
su'sidy scheme acted as a Imass 'ail9outJ #or the #ro=en 'an,ing and credit sector and
e5emptions and de#errals o# ta5 payments succeeded in preventing a more severe
economic do&nturn) *he interest rate su'sidy has ,ept credit #lo&ing to the economy% at
a time &hen 'an,s could have pre#erred to sit on their li+uidity and avoid ta,ing ris,s) It
allo&ed the re#inancing o# enterprise de'ts contracted at very high interest rates% &hich
could have led to numerous de#aults in a conte5t o# rapid disin#lation) And it 'oosted the
pro#its o# commercial 'an,s% at a time &hen the deterioration in the +uality o# their
port#olios and thin interest rate margins could have made them vulnera'le)
In order to gauge the e##ect o# the stimulus pac,age #or policy de'ate% in this paper &e
used the PCI9!!$ enterprise survey data to estimate the impact o# the pac,age) Our
results indicate that% in addition to ,eeping the money #lo&ing in the economy% the
pac,age created a large num'er o# /o's #or the economy) A C>D 'illion &as spent to
create a'out less than E!!%!!! /o's during !!$) *hus% the policy has positive and
9
First draft 15 March 2010
important e##ects in social protection% &eathering the vulnera'le group #rom the glo'al
#inancial crisis storm)

10
First draft 15 March 2010
%f%r%+c%s
Asian Development 7an, (!!$) 2lo'al Economic Crisis and AD7Ps Response1 An
Cpdate% Asian Development 7an, (Decem'er !!$))
>umon Qumar 7haumi,% >aul Estrin and Qlaus :eyer (!!-) Determinants o#
Employment 2ro&th at :NEs1 Evidence #rom Egypt% India% >outh A#rica and
(ietnam% INA DP No) 1;% INA) 2ermany)
:ales,y% Edmund) !!$) I*he (ietnam Provincial Competitiveness Inde51 :easuring
Economic 2overnance #or Private >ector Development) !!" 8inal Report)J
(ietnam Competitiveness Initiative Policy Paper R1-) (ietnam Cham'er o#
Commerce and Industry ((CCI) and Cnited >tates Agency #or International
DevelopmentDs (ietnam Competitiveness Initiative ((NCI)1 Ha Noi% (ietnam)
2overnment (!!") Report on imperative measures to prevent economic do&nturn%
sustain economic gro&th and maintain socio9economic security% Report No)
1$1?7C9CP su'mitted to >tanding Committee o# the National Assem'ly dated 1"
Decem'er !!") (in (ietnamese)
2>O (!!$d) (ietnam socio9economic development S!!$% 2>O) (in (ietnamese)
I:8 (!!$) 8iscal implications o# the glo'al economic and #inancial crisis% I:8 sta##
Position Note, >PN?!$?13) I:8)
Tohn Rand (!!4) Credit Constraints and Determinants o# the Cost o# Capital in
(ietnamese :anu#acturing) Cniversity o# Copenhagen and DER2
0orld 7an, (!!$a) *a,ing stoc,1 An update on (ietnamDs recent economic
development% prepared #or the Annual Consultative 2roup :eeting #or (ietnam%
Decem'er !!$)
0orld 7an, (!!$') *a,ing stoc,1 An update on (ietnamDs recent economic
development% prepared #or the Annual Consultative 2roup :eeting #or (ietnam%
Tune !!$)
11
First draft 15 March 2010
0a/le 3: 1e.cri%$ion o2 'aria/le. and .u((ar) .$a$i.$ic.
3aria/le Mean S$d. 1e'. Min Ma4
Su/.id) 516recei'in+ in$ere.$ .u/.id)
loan7 o$#er 8i.e 09 0.33 0.47 0 1
o8ner:uni 516o8ner o2 en$er%ri.e
#a'in+ uni'er.i$) de+ree, 0 o$#er8i.e9 0.43 0.49 0 1
;4%or$ 516e4%or$in+ 2ir(, 0 o$#er8i.e9 0.09 0.28 0 1
la/o'er200 516nu(/er o2 e(%lo)ee
+rea$er $#an 200, 0 o$#er8i.e9 0.13 0.34 0 1
la/50200 516nu(/er o2 e(%lo)ee
/e$8een 50-200, 0 o$#er8i.e9 0.14 0.34 0 1
la/10:50 516nu(/er o2 e(%lo)ee
/e$8een 10-50, 0 o$#er8i.e9 0.37 0.48 0 1
la/under10 516nu(/er o2 e(%lo)ee
under 10, 0 o$#er8i.e9 0.37 0.48 0 1
ca%:09/i+ 516e<ui$) ca%i$al +rea$er $#an
3N1 5 /illion, 0 o$#er8i.e9 0.18 0.38 0 1
ca%:09(ediu( 516e<ui$) ca%i$al
/e$8een 3N1 1-5 /illion, 0 o$#er8i.e9 0.54 0.50 0 1
ca%:09.(all 516e<ui$) ca%i$al .(aller
$#an 3N1 1 /illion, 0 o$#er8i.e9 0.28 0.45 0 1
Minin+ 516 (ain /u.ine.. in (inin+
.ec$or, 0 o$#er8i.e9 0.03 0.16 0 1
,+ri 516 (ain /u.ine.. in a+ricul$ure
.ec$or, 0 o$#er8i.e9 0.08 0.27 0 1
Ser'ice 516 (ain /u.ine.. in .er'ice
.ec$or, 0 o$#er8i.e9 0.58 0.49 0 1
Manu 516 (ain /u.ine.. in
(anu2ac$urin+ .ec$or, 0 o$#er8i.e9 0.40 0.49 0 1
=.$oc 516 >oin$ .$oc co(%an), 0
o$#er8i.e9 0.19 0.39 0 1
?i(i$ed 516 ?i(i$ed lia/ili$), 0 o$#er8i.e9 0.45 0.50 0 1
Sole 516 Sole *ro%rie$or.#i%, 0
o$#er8i.e9 0.35 0.48 0 1
;4%erience 5)ear. in e4i.$ence9 7.03 6.07 1 64
e(%:c#an+e2 5c#an+e in e(%lo)(en$9 0.89 38.86 -2462 600
%er2or(09 5/u.ine.. %er2or(ance 20099 3.57 0.98 1 5
Nu(/er o2 "/.er'a$ion 8839
12
First draft 15 March 2010
Table (: E&timation re&ult&
"?S @3 A 2S?S Bir.$ .$a+e
e<ua$ion
Coe2. S$d. ;rr. Coe2. S$d. ;rr. Coe2. S$d. ;rr.
.u/.id) 2)*1++ 0)** )**++ (),0
.ole -2.63 1.64 -2.83 1.68 0.05 0.02
li(i$ed -2.04 1.66 -2.14 1.67 0.03 0.01
(anu 0.69 0.95 0.51 0.97 0.01 0.01
.er'ice 2.03 1.04 1.76 1.01 0.05 0.01
a+ri -0.65 1.75 -1.05 1.70 0.05 0.02
ca%:09/i+ 2.67 1.82 1.19 2.29 0.16 0.02
ca%:09(ediu( 0.60 0.33 -0.43 0.64 0.12 0.01
re+ion2 2.48 1.53 1.95 1.44 0.08 0.02
re+ion3 3.66 1.82 2.75 1.67 0.14 0.02
re+ion4 2.12 1.83 1.62 1.71 0.09 0.02
re+ion5 2.72 1.78 2.49 1.74 0.05 0.02
re+ion6 1.23 2.19 1.50 2.25 -0.03 0.02
re+ion7 1.01 1.75 0.78 1.71 0.04 0.02
e4%or$ -7.31 4.08 -8.27 4.37 0.11 0.02
o8ner:uni -0.98 0.87 -0.79 0.85 -0.04 0.01
landcer$ 0.09 0.01
(e(/er 0.10 0.01
la/10:50 0.09 0.01
la/50200 0.16 0.02
la/o'er200 0.07 0.02
Con.$an$ -1.01 1.32 -1.59 1.44 0.00 0.02
Nu(/er o2 o/. 8839 8825 8825
B5 16, 88229 4.79
B5 20, 88049 50.5
Wald c#i25169 67.73
*ro/ C B 0 0 0
D-.<uared 0.0064 0.0013 0.0921
,d> D-.<uared 0.0901
Doo$ MS; 38.771 38.859 0.45002
0e.$. o2 endo+enei$): Eo: 'aria/le. are e4o+enou.
Do/u.$ .core c#i2519 2.6138 5% 6 0.10599
Do/u.$ re+re..ion B51,88079 2.6074 5% 6 0.10649
0e.$ o2 o'er-iden$i2)in+ re.$ric$ion.
Score c#i2549 6 5.12861 5% 6 0.27449
No$e: FFF, FF and F deno$e 1G , 5, and 10G .i+ni2icance le'el.
13