Local economic governance plays an important role in the development of the business sector. To assess its impact on business sector growth in Vietnam, this empirical study is conducted at the local level with all 63 provinces nationwide in the period from 2006 to 2014. The Provincial Competitiveness Index (PCI) is used as a measurement for local economic governance. | VNU Journal of Science: Economics and Business, Vol. 33, No. 5E (2017) 16-25 Local Economic Governance and the Development of the Business Sector in Vietnam Dao Thi Bich Thuy* VNU University of Economics and Business, 144 Xuan Thuy, Cau Giay Dist., Hanoi, Vietnam Received 30 November 2017 Revised 15 December 2017; Accepted 25 December 2017 Abstract: Local economic governance plays an important role in the development of the business sector. To assess its impact on business sector growth in Vietnam, this empirical study is conducted at the local level with all 63 provinces nationwide in the period from 2006 to 2014. The Provincial Competitiveness Index (PCI) is used as a measurement for local economic governance. The finding reveals that overall the PCI has a positive effect on growth in the number of enterprises and output generated in the business sector. At the sub-index level, 5 indicators show positive effects with labor training having the largest impact, followed by time costs of regulatory compliance, informal charges, transparency and finally business support service. Land access and security of tenure and proactivity of the provincial leadership unexpectedly show negative effects while the other 2 indicators, including entry cost for new firms and legal institutions, have no significant impact on business sector growth. Keywords: Local economic governance, Provincial Competitiveness Index, business sector growth. 1. Introduction * of integration. Recognizing this importance, the government has enacted and perfected corporate laws in favor of business sector development, namely from the Corporate and Private Enterprise Laws 1990, to Enterprise Laws 1999, and from State Enterprise Laws 1995 to State Enterprise Laws 2003. Enterprise Laws 2005 set a remarkable milestone when it replaced the previous laws on enterprises and applies uniformly to all enterprises disregarding their types of ownerships. Beside laws and various macroeconomic policies at the .
