WP-11: Production Inefficiency of Vietnam’s Fisheries Processing Firms

Vietnam has experienced a dramatic growth in its fisheries sector over the last two decades. One key factor underlying the impressive achievements of this sector is the rapid growth of the processing firms, which include both state-owned privately-owned firms. In order to measure their technical and allocative efficiency, we estimate a shadow cost system using a Bayesian Markov Chain Monte Carlo procedure. We find that firms have not fully exploited economies of scale. They are likely to over-utilize labor relative to capital, but those located in Mekong delta generally perform better than those located in other regions. Small firms tend to have higher allocative efficiency than larger ones. Interestingly, based on this measure, while in other regions state-owned enterprises do worse than private enterprises, the pattern seems to be reserved in the Mekong delta. In addition, large fluctuations in efficiency change and productivity change across several firms may indicate the vulnerability of weaker firms to competition form international trade.

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