Public investment, infrastructure, and the competitiveness of small and medium enterprises: empirical evidence from Vietnam’s fiscal expansion

Abstract

Purpose: This study examines the impact of public investment and infrastructure development on the competitiveness of small and medium-sized enterprises (SMEs) in the context of Vietnam’s recent fiscal expansion.

Methodology: The study employs a quantitative approach using panel data from Vietnamese provinces over the period 2015 - 2023. Data are collected from official sources, including the General Statistics Office, the Ministry of Planning and Investment, and the World Bank. Fixed-effects regression models are applied to estimate the relationship between public investment, infrastructure, and SME competitiveness while controlling for firm- and region-specific factors.

Findings: The results indicate that public investment and infrastructure development have a positive and statistically significant effect on SME competitiveness. In particular, investment in transport and digital infrastructure shows the strongest impact on productivity growth, market expansion, and export participation of SMEs.

Implications: The findings suggest that policymakers should prioritize efficient allocation of public investment toward infrastructure sectors that directly support business activities, especially transport and digital connectivity, to enhance regional competitiveness and SME performance

Originality: This study provides new empirical evidence from an emerging economy by linking fiscal expansion, infrastructure investment, and firm-level competitiveness. It contributes to the literature by offering a regional-level analysis of how public investment policies shape SME performance in developing countries.

Limitations and directions for future research: This study is limited by the use of secondary data at the provincial level and the focus on a single country context. Future research could employ firm-level microdata, explore causal mechanisms using quasi-experimental methods, and extend the analysis to cross-country comparisons.