Corruption and the business environment in Vietnam: Implications from an empirical study

Abstract

This paper examines the effect of corruption on the business environment in Vietnam. Our survey of firms conducted in Vietnam suggests that corruption is perceived as the most impactful business obstacle for their operation. It was also found that corruption has a significant negative association with the overall satisfaction of the business environment in Vietnam, which supports the hypothesis that corruption has a “sand the wheel” effect on firms' business activities. Given these results, it is urgent that the Vietnamese public authorities accelerate efforts in mitigating this issue. Although this paper sheds light on the importance of corruption, it would be useful to conduct follow-up studies examining corruption and its impact in more detail. Such studies could be conducted in segments that most severely suffer from corruption according to our survey, that is, medium-sized enterprises in the hotel/restaurant and construction sectors, Hanoi based, and Vietnamese owned firms.