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Foreign Multinationals and Local Firms in Vietnam's Economic Transition

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  • Phan Minh Ngoc
  • Eric D. Ramstetter

Abstract

This paper compares the economic performance of foreign multinational corporations (MNC) and local firms in Vietnam, distinguishing between two distinct types of local firms: state‐owned enterprises (SOE) and non‐SOE. Between the mid‐1990s and 2000, foreign MNC in Vietnam's economy grew very rapidly, but their growth has been much slower thereafter. Consistent with the theoretical suggestion that MNC possess relatively large amounts of firm‐specific assets related to production technology, marketing networks and management know‐how, these comparisons suggest that foreign MNC were generally larger and had higher labor productivity, capital intensity, wage levels, investment propensities and trade propensities than non‐MNC. On the other hand, foreign MNC tended to have relatively low capital productivity and wage shares of value added, while results regarding profitability were mixed. In general, these differentials tended to be relatively small between foreign MNC and SOE, and SOE tended to be larger than foreign MNC in terms of employment. Correspondingly, comparisons of foreign MNC with non‐MNC generally revealed more consistent differences, largely because the local private sector is still very underdeveloped in Vietnam.

Suggested Citation

  • Phan Minh Ngoc & Eric D. Ramstetter, 2004. "Foreign Multinationals and Local Firms in Vietnam's Economic Transition," Asian Economic Journal, East Asian Economic Association, vol. 18(4), pages 371-404, December.
    • Handle: RePEc:bla:asiaec:v:18:y:2004:i:4:p:371-404
    DOI: 10.1111/j.1467-8381.2004.00197.x
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    Cited by:

    1. Barker, Tom & Üngör, Murat, 2019. "Vietnam: The next asian Tiger?," The North American Journal of Economics and Finance, Elsevier, vol. 47(C), pages 96-118.
    2. Harpreet Dusanjh & A.S. Sidhu, 2009. "Multi-spillover Effects of Multinational Corporations on Host Countries," Global Business Review, International Management Institute, vol. 10(2), pages 243-260, July.
    3. Ramstetter, Eric D. & Haji Ahmad, Shahrazat Binti, 2013. "Do Multinationals Use Water and Energy Relatively Efficiently in Malaysian Manufacturing?," AGI Working Paper Series 2013-16, Asian Growth Research Institute.
    4. Ramstetter, Eric D. & Kohpaiboon, Archanun, 2013. "Foreign Ownership and Energy Efficiency in Thailand’s Local Manufacturing Plants," AGI Working Paper Series 2013-15, Asian Growth Research Institute.
    5. Ramstetter, Eric D. & Ngoc, Phan Minh, 2013. "Productivity, ownership, and producer concentration in transition: Further evidence from Vietnamese manufacturing," Journal of Asian Economics, Elsevier, vol. 25(C), pages 28-42.
    6. David B. Audretsch & Antje Fiedler, 2022. "The Vietnamese entrepreneurship paradox: how can entrepreneurs thrive without political and economic freedom?," The Journal of Technology Transfer, Springer, vol. 47(4), pages 1179-1197, August.
    7. Pradeep Kumar Keshari, 2011. "Efficiency Spillovers from FDI in the Indian Machinery Industry: A Firm Level Study Using Panel Data Models," Working Papers id:4195, eSocialSciences.
    8. Chih-Hai Yang & Chung-Yueh Chiu & Meng-Wen Tsou, 2017. "Location Choice of Multinational and Local Firms in Vietnam: Birds of a Feather Flock Together?," The Japanese Economic Review, Japanese Economic Association, vol. 68(1), pages 95-114, March.
    9. Anze Burger & Crt Kostevc, 2006. "In search of true productivity differences," LICOS Discussion Papers 17006, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    10. Phan Minh Ngoc, 2008. "Sources of Vietnam's economic growth," Progress in Development Studies, , vol. 8(3), pages 209-229, July.
    11. Ramstetter, Eric D. & Narjoko, Dionisius, 2013. "Foreign Ownership, State Ownership and Energy Efficiency in Indonesia's Private Manufacturing Plants," AGI Working Paper Series 2013-17, Asian Growth Research Institute.
    12. Minor, Peter & Walmsley, Terrie & Strutt, Anna, 2018. "State-owned enterprise reform in Vietnam: A dynamic CGE analysis," Journal of Asian Economics, Elsevier, vol. 55(C), pages 42-57.
    13. Le, Manh-Duc & Pieri, Fabio & Zaninotto, Enrico, 2019. "From central planning towards a market economy: The role of ownership and competition in Vietnamese firms’ productivity," Journal of Comparative Economics, Elsevier, vol. 47(3), pages 693-716.
    14. Keshari, Pradeep Kumar, 2013. "Comparative performance of foreign affiliates and domestic firms in the Indian machinery industry," MPRA Paper 33076, University Library of Munich, Germany, revised 20 Apr 2013.

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