The Effect of Local Governance on Firm Productivity and Resource Allocation
Governance quality plays a key role in private sector development: competent bureaucrats not only create good policies and regulations but also effectively implement them to shape the business environment. The authors exploit Vietnam’s decentralization of administrative tasks since the early 2000s to test this hypothesis. The authors examine how changes in the provincial administration of national business regulations affect firms through two channels: within firm productivity levels and resource allocation across firms.