Can direct government assistance improve efficiency performance of manufacturing SMEs?

This paper examines the impact of government assistance in the forms of credit at start-up, credit during operation and premisesland at start-up on efficiency performance of Vietnamese manufacturing SMEs. Analysing firm level data from surveys of manufacturing SMEs during the period 2002-2007, the paper finds that the impact of the above forms of government assistance on efficiency performance of domestic non-state SMEs is limited. There is no significant relationship or a negative relationship between government assistance in these forms and the technical efficiency of the manufacturing SMEs sector in aggregate. Meanwhile, the positive influence of the assistance is only observed in some sub-sectors. The results are discussed in details in the paper which also offers evidence-based policy recommendations.