This paper examines the role of ownership and market competition in Vietnamese firms’ total factor productivity (TFP) from 2001 to 2011. Making use of a large panel dataset of manufacturing firms, we find that, on average, both foreign-owned enterprises (FOEs) and state-owned enterprises(SOEs) have performed better than privately owned enterprises (POEs) in terms of their TFP levels. However, while FOEs ranked the highest in terms of TFP in the period 2001–2006, SOEs “closed the gap” with FOEs in the period 2007–2011. SOEs’ good performance may be the result of the state-led development policies undertaken during the 2000s. We also find that market competition has been effective in enhancing average firm productivity and reducing the gaps in efficiency across firms of different ownership types. Based on these results, we compare Vietnam’s transition path with those followed by other countries.

Keywords: Ownership, market competition, TFP, Vietnamese manufacturing, transition economies

JEL classification: D24, L33, O53, N60, P27

(Published in Journal of Comparative Economics, 2019, 47 (3), 693-716: https://doi.org/10.1016/j.jce.2019.04.002)