Productivity convergence and the role of innovation in productivity convergence: The case of processing and manufacturing enterprises in Vietnam

Анотація

The study utilizes enterprise survey data from the General Statistics Office (GSO) spanning 2012 to 2020 to measure productivity convergence and assess the impact of innovation on this convergence within Vietnam’s processing and manufacturing sectors. By applying the semi-parametric estimation method proposed by Levinsohn and Petrin, the study first calculates Total Factor Productivity (TFP) and then uses regression estimates to analyze unconditional (absolute) convergence, represented as β. Finally, the study evaluates how innovation influences productivity convergence. The research findings reveal that TFP’s contribution to output growth tends to increase. Productivity convergence in the manufacturing and processing industry is notably rapid, with low-productivity enterprises catching up 38.8% faster than their high-productivity counterparts, and a half-life index of merely 1.8 years. Furthermore, innovation is found to have a positive impact on productivity convergence. These results provide critical empirical evidence for business managers and policymakers to formulate effective strategies and policies that foster innovation in Vietnam’s processing and manufacturing enterprises.

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