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Can foreign direct investment foster the manufacturing industries’ spatial total factor productivity convergence in a transition economy? An empirical approach from Vietnam

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  • Anh Tuan Pham
  • Minh Khac Nguyen
  • Hoang Linh Dang
  • Thi Xuan Thu Nguyen

Abstract

This study tries to examine the influence of foreign direct investment (FDI) on the total factor productivity (TFP) convergence of the manufacturing industries in Vietnamese provinces. We find that the convergence rates estimated using spatial lag and error models are larger than those implied by panel data models that do not consider spatial dependence. The spatial dependence of TFP growth in the provinces is due to geographical TFP and FDI spillovers. Our findings indicate that studies on the convergence rate of regions should check for spatial dependence.

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  • Anh Tuan Pham & Minh Khac Nguyen & Hoang Linh Dang & Thi Xuan Thu Nguyen, 2021. "Can foreign direct investment foster the manufacturing industries’ spatial total factor productivity convergence in a transition economy? An empirical approach from Vietnam," Bulletin of Economic Research, Wiley Blackwell, vol. 73(4), pages 606-623, October.
    • Handle: RePEc:bla:buecrs:v:73:y:2021:i:4:p:606-623
    DOI: 10.1111/boer.12265
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