Business Climate, Economic Complexity, and Performance at the Provincial Level in Viet Nam

<jats:p>This study investigates how subnational institutions impact the manufacturing sector in Viet Nam, comparing foreign-invested and domestic firms. Using data from 63 provinces, results reveal that institutional changes—measured by the Provincial Competitiveness Index—have little effect on economic complexity, revenues, employment, or productivity. Surprisingly, weaker governance in certain areas sometimes correlates with better firm outcomes. The weak relationship between institutions and firm performance is attributed to the dominance of foreign-invested companies and their limited engagement with local firms.</jats:p>