The impact of the provincial competitiveness index on firms’ market entry in Vietnam

Abstract

The study examines the impact of the provincial competitiveness index (PCI) on the market entry decisions of enterprises in Vietnam during the 2017–2024 period. Using a panel data regression approach with fixed effects (FEM) and clustered robust standard errors, the findings indicate that the quality of provincial economic governance has a significant influence on firm entry. Factors such as entry costs, transparency, time costs, and legal institutions and security positively affect business entry in the short term. The estimated coefficients of factors such as land access, informal charges, business support policies, and fair competition are statistically significant in the lagged model. In particular, the legal institutions and security index demonstrate the most stable and positive impact across both estimated models. The research provides empirical evidence for local governments to further improve institutions, reform administrative procedures, enhance local governance quality that promotes entrepreneurship, and encourage enterprise development in the coming years, especially following the administrative merge and the increasingly recognized role of the private sector as a key driver of Vietnam’s economy.