Productivity growth, efficiency, and export orientation - evidence from Vietnamese small and medium enterprises

This study uses the DEA-based Malmquist index to measure and examine the firm level total factor productivity and its components (i.e., technical efficacy, scale efficacy, and technological change) of small and medium enterprises in two Vietnamese manufacturing industries (wood and manufacturing, and rubber and plastic) for the period from 2005 to 2013. It then applies an endogenous switching regression model to analyses the effects of export participation on the productivity and efficiency of a firm, explicitly controlling for the effect of self-selection into foreign markets. The findings confirm the superiority in technical efficiency of exporters over non-exporters, especially in the rubber and plant industry. In addition, exporters use more labor-intensive technology to align with Vietnam's competitive advantage. Moreover, productivity is found to be driven by pure efficiency change rather than other sources. Lastly, previous export status is the key factor that affects the decision to export.