Firm Efficiency in a Transitional Economy: Evidence from Vietnam

Abstract

The paper examines efficiency performance of the non‐state small and medium manufacturing industries in a transitional and developing economy. Using firm level data in Vietnam from 1996 and 2001, cross‐sectional models are estimated using the stochastic frontier method. The results show a considerable variation in efficiency levels among firms and that a greater use of family labor and a metropolitan location are associated with improvement in technical efficiency. The results indicate few benefits from direct government financial and non‐financial assistance to businesses.

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