Knowledge and Productivity Paradox in an Emerging Country: Empirical Evidence From Vietnam

This paper tests the ‘productivity paradox’ with a new approach, investigating the impact of not only computerisation but also knowledge factors on productivity. The paper applies the two-step GMM system model for 2007 to 2011, the period strongly reformed in science and technology in an emerging country like Vietnam. There are mixed findings, ‘productivity paradox’ depends on the kind of knowledge factors and firm attributes. Human capital is a knowledge factor which has positive and sustainable power on labour productivity. In general, business model innovation has the strongest impact on productivity, for small-sized or FDI firms. ‘Productivity paradox’ in terms of computerisation appears for large-sized firms. Computerisation should be boosted for small and medium-sized. Small-sized, medium-sized, or foreign invested firms should invest more in innovation and development. ‘Productivity paradox’ depends on the interaction effect between human capital efficiency and computerisation. JEL Classification: D2, D8, L2, J2.