The impacts of institutional implementation on provincial economic performance: the case of Vietnam (2007-2011)

Abstract

Given the intensive PCI score race among Vietnamese provinces in the past year so as to improve the enabling environment for local economic development, this study is to justify the imperativeness of such a race. Employing the PCI and its nine sub-indices as proxies for institutional quality, we explore the institutional impacts on GDP for the dataset of 58 Vietnamese provinces from 2007 to 2011. In realizing this objective, we make an attempt to incorporate into the estimation models of both Cobb-Douglas and Translog functional form the de facto overstatement of provincial GDP. While the positive impacts of PCI on provincial GDP are statistically confirmed, the regression results obtained for the nine sub-indices are divergent across functional forms and outlier treatment approaches. To the extent that the economic significance of different institutional factors is assessed, our research objective is realized and respective policy implications are then suggested.