Assessment of TFP change at provincial level in Vietnam: New evidence using Färe–Primont productivity index

Thanh Viet Nguyen*, Michel Simioni, Dao Le Van

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)


Vietnam has become a lower middle-income country in less than 30 years, and is now facing the middle-income trap risk. Knowledge of changes in total factor productivity (TFP) is an essential element in assessing this risk. An in-depth analysis of the evolution of TFP and its determinants in Vietnam is presented in this paper. TFP evaluation uses a recently proposed multiplicative-complete economically ideal index, namely the Färe–Primont index, to evaluate TFP and to decompose it into its different components: technical change, pure technical, mix and scale efficiencies. TFP is computed at the provincial level over the 2010–2017 period. The results shows that estimated provincial TFP values are, on average, small whatever the considered year, but they have increased with an annual compound growth rate of 3.46%. Technical progress as measured by TFP* appears to be the main driver of TFP growth over the period, with an annual compound growth rate of 3.34%. The expansion of the production set under constant returns-to-scale, from which TFP* is measured, is guided by movements of Ho Chi Minh city. Accordingly, on average, overall productive efficiency stagnated, with an annual compound growth rate of 0.12%. Technical efficiency has also stagnated over the period with its annual compound growth rate -0.62%. The results imply that there has been an increasing gap between provinces in terms of the resource allocation efficiency. This evolution may have negative consequences on sustainable economic development and lead the country into the risk of middle income trap in the future.

Original languageEnglish
Pages (from-to)329-345
Number of pages17
JournalEconomic Analysis and Policy
Publication statusPublished - Oct 2019

Bibliographical note

Funding Information:
This research is funded by Vietnam National University, Hanoi (VNU) under project number QG.17.35. Michel Simioni thanks INRA-CIRAD GloFoodS program for supporting his stay as visiting professor at Hanoi University for Natural Resources and Environment, Vietnam from October 2018 to February 2019.

Publisher Copyright:
© 2019 Economic Society of Australia, Queensland

Other keywords

  • Färe–Primont index
  • Mix and scale efficiencies
  • Technical change
  • Technical efficiency
  • Total factor productivity
  • Vietnam


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