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Obstacles to Economic Freedom Affecting Micro, Small, and Medium Enterprises (MSMEs) in Southeast Asian Countries

Obstacles to economic freedom such as trade obstacles, finance obstacles, taxes, and corruption affect the ability of micro, small, and medium enterprises (MSMEs) to maximize firm performance. Existing empirical studies investigating the effect of specific MSMElevel obstacles to economic freedom are scarce in Southeast Asian countries. Therefore, this paper focuses on analyzing and comparing the effects of these obstacles to economic freedom on the performance of MSMEs in Indonesia, Vietnam, the Philippines, and Malaysia using firm-level data from the 2015 World Bank Enterprise Survey. The methodology utilizes an ordinary least squares regression, and endogenous treatment effects regression, in determining which obstacles of economic freedom significantly affect MSME performance. Overall, it was found that trade obstacle is positively correlated to firm performance in all the countries except in Vietnam, whereas finance obstacle is negatively correlated to firm performance in all the countries except in Malaysia, whereas results were negative for taxes in the Philippines and corruption in Vietnam.


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