Korea Trade Review (무역학회지)

Korea Trade Research Association (한국무역학회)
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Are Politically Connected Firms More Likely to Export? Evidence from Vietnam

기업의 정치적 연계와 수출성과의 관련성: 베트남 사례를 중심으로

  • Yuri Kim (Asia-Pacific Research Center, Hanyang University) ;
  • Yasuyuki Todo (School of Political Science and Economics, Waseda University) ;
  • Taewoo Roh (Department of International Trade and Commerce, Soonchunhyang University)
  • Received : 2021.10.09
  • Accepted : 2021.10.28
  • Published : 2021.10.30
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Abstract

Political connections may facilitate firms' exporting activities, particularly in developing countries, because politically connected firms may be more likely to receive informational and financial support, allowing them to overcome barriers to export. We test this hypothesis using a unique, firm-level dataset from traditional apparel and textile clusters in the Red River Delta Region in Northern Vietnam. We find that political connection of certain types increases the chance of receiving valuable information or financial support from the government. Moreover, those firms that have access to government information have higher chances of being direct exporters. However, firms that receive financial support from the government are not necessarily engaged in exporting activities. Although politically connected firms are more willing to export, they do not necessarily engage in more exporting activities than firms without such connections. These results suggest that the misallocation of information and financial resources to politically connected but insufficiently productive firms leads to a failure to promote exporting activities. In contrast, political connection increases the chance of importing materials and parts, possibly because high productivity is necessary for exporting, but not for importing.

Keywords

Acknowledgement

The authors would like to thank Daichi Shimamoto, Fumio Hayashi, Aya Suzuki, and seminar participants at the European Trade Studies Group Annual Conference and International Conference of the Association of Korean Economic Studies for helpful comments. This study was conducted as part of a project titled 'Research on Global Inter-Firm Networks and Related Policies,' which was undertaken at the Research Institute of Economy, Trade, and Industry (RIETI). The opinions expressed and arguments employed in this paper are the sole responsibility of the authors and do not necessarily reflect those of RIETI, Hanyang University, Waseda University, Soonchunhyang University, or any institution with which the authors are affiliated.

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