Technical progress, technical efficiency, and environmental change : New insights into Vietnam’s productivity growth

Abstract

Vietnam has experienced remarkable economic growth over last three decades, but the country’s development fundamentals remain fragile. This growth has been primarily driven by an expanding labor force and capital deepening, with less emphasis on productivity growth. In this article, we aim to provide insights into technical progress, environmental change, and technical efficiency at the provincial level in Vietnam from 2010 to 2019 using stochastic production frontier analysis with endogenous inputs and external factors. We analyze differences in productivity and efficiency during the study period to determine the impact of the production environment, technology, and management at the provincial level in Vietnam. Our findings reveal a notable increase in productivity, averaging 3.6 percent per year across all provinces. Assessing technical efficiency, we identify a positive impact of the provincial competitiveness index and a negative influence of foreign direct investment. The implications underscore the need for Vietnam to strengthen provincial institutions and enhance financial, educational, and technological policies to improve productivity. This article offers valuable insights for policymakers and stakeholders engaged in sustainable economic development in Vietnam and beyond.