| This dissertation consists of three self-contained papers on economic reform in transition economies, with a special focus on Vietnam.; Economic reform involves learning. However, learning has largely been ignored in the reform literature. The first paper, "Gradualist vs. Big-Bang Reform: The Role of Uncertainty and Learning," presents a Bayesian learning model in which reformers can implement reform experimentation to learn about the potential of the reform. In so doing, reformers face an important trade-off, which suggests an optimal scale of experimentation: a small-scale experimentation is appealing since it is less costly and involves less risk; yet, it is not as revealing as a larger one. This result helps us understand why some countries adopted a big bang approach while others followed gradualism.; The second paper, "A Positive Theory of Privatization for Vietnam," explores the ideological conflict in Vietnam's socialist market economy. On the one hand, privatization of the state-owned enterprises (SOEs) is necessary since the credibility and legitimacy of the Communist Party-State greatly depend on the efficiency and performance of the SOEs. On the other hand, the SOEs provide both economic and political bases for the Communist Party-State. This suggests a motivation for the state in maintaining partial ownership and, therefore, intervention in privatized firms. The paper finds that the state trades off ownership share for higher excessive employment and lower subsidies in privatized firms.; The third paper, "Privatization and Competition in Vietnam: Substitutes or Complements?" is motivated by the current debate about the complementarity versus substitutability between competition and privatization in transition economies. Both theoretical and empirical specific economic and institutional contexts. This paper studies the issue in the particular context of Vietnam's economy. It focuses on the consequences of the unequal treatment given by the government to private, privatized, and public firms. It finds that the relationship between privatization and competition policies depends on the government's objectives. The model also generates endogenous demand for a competition-enhancing policy. |
