PCI

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IV. Special Topics

A. The Value Chain Approach in Conflict-Affected Contexts

B. Vulnerable Populations and the Value Chain Approach

Provincial Competitiveness Index (PCI)

Vietnam’s Provincial Competitiveness Index (PCI)is an example of a subnational approach that seeks to foster healthy competition by comparing business environments across provinces. The Index was developed and first implemented in 2005 by the Vietnam Chamber of Commerce and Industry (VCCI) and the Vietnam Competitiveness Initiative (VNCI), an economic development project funded by USAID.

Since it was first launched in 2005, the PCI has become an important component in Vietnam’s policy dialogue relating to economic and administrative reform, as well as market liberalization, at both the national and provincial levels. The PCI focuses attention on the importance of provincial governance and empowers the private sector with credible information and analysis. The index is an analysis of survey data collected from the Vietnamese private sector and statistical or hard data combined into ten sub-indices:

entry costs,
access to land,
transparency and access to information,
time costs of regulatory compliance,
informal charges,
state sector bias,
proactivity of provincial leadership,
private sector development policies,
labor training, and
legal institutions.

These subindices are then aggregated into overall PCI using a procedure that assigns weights to each according to their importance in shaping economic performance (investments, profitability, and firm registrations), based on an econometric analysis. (Note: Provinces are ranked against each other's performance and not against those of other countries)

Since 2006, the PCI has covered all 64 provinces, and the approach has remained stable—which allows for comparisons over time. Vietnam is somewhat unique with respect to available economic data by region (province). Where such data are not available, the approach needs to be adjusted; in these cases, it may not always be possible to disentangle the effects of the business environment, as measured in the PCI, from other factors.

The results of the PCI have been widely publicized and the index was ranked among the “top 10” national economic events in 2005 and 2006. Having been published annually for four years, last in December 2008,the PCI is a flexible tool to address policy concerns at the national level, including the impact of economic integration through implementation of Vietnam’s Bilateral Trade Agreement and WTO commitments.

The PCI reports, as well as survey data, are available at http://www.pcivietnam.org.

Resources

PCI Reports and Survey Data
Vietnam Business Finance
Paths to Regulatory Reform: Moldova, Ukraine, and Vietnam, Malesky, Edmund; Ray, David; Nemec, Linda. Developing Alternatives 11, Spring 2006; pp. 32-45.
Implications of the Provincial Competitiveness Survey for National Policy, Weeke, Helle; Vietnam Business Forum, Hanoi; May 2007.
Vietnam's Business Environment: Complying with Obligations Abroad and Competing at Home, Weeke, Helle; Parker, Steve; Malesky, Edmund. Developing Alternatives 13, Winter 2009; pp. 39-46.