Published in:Vietnam Competitiveness Initiative Policy Paper ; No. 11
Extent:
1 Online-Ressource (122 p)
Language:
English
Origination:
Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments 2006 erstellt
Description:
Funded by US-AID, Provincial Competitiveness Index (PCI) is an effort to explain why some parts of the country perform better than others in terms of private sector dynamism, job creation and economic growth. Using new survey data from businesses that describe their perceptions of their local business environments, as well as credible and comparable data from official and other sources regarding local conditions, the PCI rates provinces on a 100-point scale. In 2005, the overall index is comprised of nine sub-indices that explain much of the variation in performance across provinces in Vietnam. In 2006, two new sub-indices were developed to capture other aspects of Provincial Government efforts to enhance the business environment. In addition, a number of the existing indices were strengthened by modifying certain indicators. Sub-indices and indicators are described in detail under the caption “PCI Sub-Indices” below. The research has a number of important design elements that make the results easily translated into governance reforms: First, by separating out the growth that is generated by initial conditions (i.e. the fundamental underlying factors that contribute to growth but that are very difficult or impossible to address in the short-term), the research was able to determine that good governance practices are possible at the provincial level and that these practices explain why some areas outperform others or why some areas have similar economic outcomes despite having very different initial conditions. The focus on governance practices should lead to improvements in economic performance, even without significant changes in the physical and human infrastructure in a region. Second, by normalizing the scores around the best practices already found in Vietnam, the index directs provincial governments to improve their performance, not against some ideal standard of good governance but rather against the best performance already practiced by their peers within the same national political framework. Therefore, any province in theory could attain a perfect score by adopting the best practices already found in Vietnam. The implication is that there are no easy explanations for poor performance – every provincial government can do better to generate a more favorable economic environment within their borders. Third, by comparing governance practices against actual economic performance, the PCI provides initial estimates of how important governance practices are to attracting investment and generating growth. The research provides a compelling demonstration of the association between business-friendly governance practices, business responses and, importantly, welfare improvements. This last connection is critical as it makes clear that business-friendly policies and practices benefit not just entrepreneurs but also the broader society that relies upon private sector dynamism to provide the jobs that raise household living standards. Research results from the work of the Vietnam Competitiveness Initiative and the Vietnam Chamber of Commerce and Industry