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Regionalization, foreign direct investment and poverty reduction: Lessons from Vietnam in ASEAN

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  • Hafiz Mirza
  • Axèle Giroud

Abstract

This article examines whether, and to what degree, Vietnam has benefited from foreign direct investment (FDI) since its entry into ASEAN in 1995. The investigation consists of an assessment of ‘halo’ and market creation effects, linkages into the regional and global value chain and the lessons learned from the experience of other ASEAN countries. There is little evidence that the halo or market effects have affected TNC entry into Vietnam. However, foreign subsidiaries in Vietnam are closely integrated into regional and global value chains and ASEAN-based TNCs are a very promising source for further investment into Vietnam, however this value-chain involvement has to be managed very carefully. On the lessons side, the analysis shows that development in most ASEAN economies is largely a scale effect (with nuances) and the Holy Grail of spillover effects has scarcely been glimpsed. Vietnam can learn valuable lessons from ASEAN countries such as Malaysia and Thailand, where direct effects (e.g. employment) and consumption multipliers are high, but value-chain multipliers and spillovers remain low.

Suggested Citation

  • Hafiz Mirza & Axèle Giroud, 2004. "Regionalization, foreign direct investment and poverty reduction: Lessons from Vietnam in ASEAN," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 9(2), pages 223-248.
    • Handle: RePEc:taf:rjapxx:v:9:y:2004:i:2:p:223-248
    DOI: 10.1080/1354786042000207353
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    Cited by:

    1. Josef T. Yap, 2010. "Managing Capital Flows: The Case of the Philippines," Chapters, in: Masahiro Kawai & Mario B. Lamberte (ed.), Managing Capital Flows, chapter 13, Edward Elgar Publishing.
    2. Ma, Xufei & Delios, Andrew, 2007. "A new tale of two cities: Japanese FDIs in Shanghai and Beijing, 1979-2003," International Business Review, Elsevier, vol. 16(2), pages 207-228, April.
    3. Anh Ngoc Nguyen & Nguyen Thang & Le Dang Trung & Ngoc Quang Pham & Chuc Dinh Nguyen & Nhat Duc Nguyen, 2008. "Foreign Direct Investment in Vietnam: Is There Any Evidence Of Technological Spillover Effects," Working Papers 18, Development and Policies Research Center (DEPOCEN), Vietnam.
    4. Josef T. Yap, 2008. "Managing Capital Flows : The Case of the Philippines," Development Economics Working Papers 22703, East Asian Bureau of Economic Research.
    5. Nigel Driffield & Katiuscia Lavoratori & Yama Temouri, 2021. "Inward investment and UK productivity," Working Papers 014, The Productivity Institute.
    6. Scott R. Sanders & David L. Brown, 2014. "Escaping Poverty in Post‐Socialist Vietnam: Does Place Matter?," Poverty & Public Policy, John Wiley & Sons, vol. 6(4), pages 332-353, December.
    7. Nguyen, Thao Phuong, 2020. "The determinants impact on poverty reduction in Vietnam," OSF Preprints 3f9xc, Center for Open Science.
    8. Hummera Saleem & Malik Shahzad Shabbir & Syed Ali Raza Shah & Jalal Shah, 2021. "Nexus between Foreign Direct Investment and Poverty Reduction: A case of Pakistans," iRASD Journal of Economics, International Research Alliance for Sustainable Development (iRASD), vol. 3(3), pages 272-280, December.
    9. Bach Nguyen & Hoa Do & Chau Le, 2022. "How much state ownership do hybrid firms need for better performance?," Small Business Economics, Springer, vol. 59(3), pages 845-871, October.
    10. Fayyaz Ahmad & Muhammad Umar Draz & Lijuan Su & Ilhan Ozturk & Abdul Rauf & Shahid Ali, 2019. "Impact of FDI Inflows on Poverty Reduction in the ASEAN and SAARC Economies," Sustainability, MDPI, vol. 11(9), pages 1-24, May.
    11. Nguyen, Ngoc Anh & Nguyen, Thang, 2007. "Foreign direct investment in Vietnam: An overview and analysis the determinants of spatial distribution across provinces," MPRA Paper 1921, University Library of Munich, Germany.
    12. Anh Ngoc Nguyen & Nguyen Thi Tuong Anh & Nguyen Ngoc Minh & Nguyen Thi Phuong Mai, 2018. "SOUTH KOREAN MULTINATIONAL ENTERPRISES AND VIETNAM SMEs’ PARTICIPATION IN GLOBAL PRODUCTION NETWORKS IN THE CONTEXT OF INCREASED ASEAN AND EAST ASIAN REGIONAL ECONOMIC INTEGRATION," Working Papers 03, Development and Policies Research Center (DEPOCEN), Vietnam.
    13. Babajide Fowowe & Mohammed Shuaibu, 2014. "Is foreign direct investment good for the poor? New evidence from African countries," Economic Change and Restructuring, Springer, vol. 47(4), pages 321-339, November.

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