Institutional and economic transition in Vietnam: analysing the heterogeneity in firms’ perceptions of business environment constraints

Vietnam has experienced a gradual process of institutional transition combined with rapid economic growth since the Doi Moi reform in 1986. In recent years, the government has recognized the need to implement reforms to foster the development of favourable business environment conditions. In this scenario, however, the government seems to assume a uniform demand for business environment reforms, ignoring possible divergences in the constraints faced by different actors of the system. The aim of this paper is to analyse the heterogeneity in firms’ perceptions of business environment constraints. Adopting discrete choice models on firm-level data and subjective assessments on business environment obstacles, we differentiate the nature and severity of firms’ obstacles according to different characteristics of the enterprises, including the firm size, territorial localization and levels of performance and competitiveness. The study is useful as an informative base for defining public interventions calibrated on the different categories and needs of Vietnamese enterprises.