Global Turbulence,Local Impact: How Do Regional Uncertainties Affect Firm Outcomes in a Transition Economy?

Abstract

In an era of globalization, countries face rising risks from global uncertainty spillovers. While major advanced economies are recognized as key sources, spillovers from entire economic regions remain underexplored, especially for emerging economies. This study examines how economic and political uncertainties from five regions (Africa, Asia–Pacific, Middle East and Central Asia, Europe and the Western Hemisphere) affect the financial performance of Vietnamese firms. Using the system generalized method of moments estimator, we find substantial heterogeneity: uncertainties from Africa, the Middle East and Central Asia, and Europe are associated with improved performance, whereas those from the Asia–Pacific and Western Hemisphere have negative impacts. Robustness checks with fixed effects, difference generalized method of moments, and random effects estimators, together with alternative specifications that exclude COVID-19, use reduced-group regional indices, and test COVID-19’s moderating role, confirm these findings. The results offer practical implications for policymakers, managers and investors navigating region-specific uncertainty spillovers.