Unveiling the role of government support: Empirical studies on the performance of cooperatives in Vietnam

Abstract

In response to the challenges facing cooperatives in Vietnam and the government's emphasis on the collective economy as a pillars of the socialist-oriented market economy, numerous policies have been introduced to support and promote cooperatives development. However, their effectiveness remains underexplored. This study provides the first comprehensive analysis of government support for cooperatives in Vietnam, using a panel dataset of 6818 cooperatives from 2012 to 2016. The findings reveal heterogeneous effects of support types on cooperative performance. Capacity-building support consistently improves income generation, return on assets (ROA) and productivity, though its benefits are less pronounced for cooperatives engaged in intra-trade. Infrastructure support negatively affects ROA but significantly increases income per member. Credit support improves ROA but reduces labour growth, reflecting its focus on capital-intensive projects, with intra-trade cooperatives benefiting more in income generation. Tax support positively influences ROA, productivity and labour growth, though its benefits on ROA diminish for intra-trade cooperatives, and its effect on labour growth shifts from negative in younger cooperatives to positive in older ones. Other supports improve productivity across all cooperatives and boosts labour growth as cooperatives mature. The findings point out the need for tailored, context-specific interventions to foster sustainable cooperative development in transitioning economies.