Relationship Between the Provincial Competitiveness Index and Corporate R&D Investment in Vietnam

This study investigates how the quality of economic governance impacts corporate research and development (R&D) investment in Vietnam. We use the Provincial Competitiveness Index (PCI) to gauge economic governance quality. Our findings indicate that improved economic governance encourages firms to invest more in R&D. This conclusion remains consistent when using two different measures of R&D investment and employing propensity score matching to address the endogeneity issue. Moreover, the effect of the business environment on innovation is moderated by the size of the firm and the stock exchange on which it is listed. Our findings hold significance as governments in developing countries strive to boost firm innovation, a crucial driver of economic advancement. JEL Classification H00, O10, O30