Enterprise Growth and Survival in Vietnam: Does Government Support Matter?

TLDR

The study investigates whether direct government assistance and state‑sector interactions influence the long‑term performance of Vietnamese manufacturing SMEs. The analysis shows that state‑sector interaction improves firm dynamics, with state‑customer firms achieving higher survival and growth, while temporary tax exemptions boost long‑term growth of non‑household firms and initial credit support benefits rural enterprises.

Abstract

Abstract This paper analyses whether direct government assistance during start-up and other forms of interaction with the state sector have influenced the long-run performance of small and medium-sized manufacturing enterprises (SMEs) in Vietnam. Using three partly overlapping surveys during the period 1990–2000, we find strong effects on firm dynamics from interaction with state institutions. Enterprises which have the state sector as their main customer perform better. This is so for both survival and growth. Moreover, temporary tax exemptions during firm start-up had a separate and positive influence on long-run growth for non-household enterprises and initial credit support seems to benefit rural firms.