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Relationship between provincial competitiveness index and development of provincial enterprises

The results show that the data do not demonstrate the relationship between the PCI ranking and indexes of development of enterprises. This implies that great caution should be taken when interpreting the PCI ranking of a province, especially in treating the PCI as a driving force for the provincial economic development. | JED No.222 October 2014| 107 Relationship between Provincial Competitiveness Index and Development of Provincial Enterprises Vương Đức Hoàng Quân HCMC Institute for Development Studies - quan_vdh@yahoo.com ARTICLE INFO ABSTRACT Article history: Received: April 12, 2014 Received in revised form July 7, 2014 Accepted: Sep 30, 2014 Employing data for the years 2006–2011, the research analyzes the relationship between Provincial Competitiveness Index (PCI) ranking and development of enterprises in certain Vietnamese provinces. The results show that the data do not demonstrate the relationship between the PCI ranking and indexes of development of enterprises. This implies that great caution should be taken when interpreting the PCI ranking of a province, especially in treating the PCI as a driving force for the provincial economic development. Keywords: PCI, local government, enterprise, economic development. 108 | Vương Đức Hoàng Quân | 107 - 123 1. PROBLEM STATEMENT Economic operation of local government plays an important role among the factors affecting regional economic development. While location and natural resources are considered ‘hard’ advantages or unchangeable advantages, economic operations are referred to as ‘soft’ advantages – changeable advantages based on capacity, level of commitment, willingness and effort of provincial governments. With the aim to measure and assess economic governance of provincial governments, non-governmental organizations and Vietnam Chamber of Commerce and Industry (VCCI) have collaborated on the design and examination of Provincial Competitiveness Index (PCI) since 2005, conducive to change the awareness of ‘soft’ advantages and promote economic development among provinces, especially those of private sector. Nevertheless, during the implementation reports on the PCI indicate some matters worthy of notice. No scientific research has so far proved the relationship between the PCI .