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The Long-Term Effects of War on Foreign Direct Investment and Economic Development: Evidence from Vietnam

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  • Nguyen, Cuong
  • Tran, Tuyen
  • Vu, Huong

Abstract

In this study, we find that the negative effect of unexploded ordnance (UXO) on the geographical density of foreign direct investment and large firms is a new channel through which the war legacy impedes local development in Vietnam. A 1% increase in the proportion of UXO-contaminated area leads to a 0.78% relative decrease in the density of FDI firms within districts. Point estimates for the elasticity of the density of joint-venture FDI firms and state-owned enterprise (SOEs) due to UXO are smaller, equal to -0.56 and -0.54. Consequently, a 1% increase in the proportion of UXO-contaminated areas leads to a 0.46% relative decrease in the intensity of nighttime light.

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  • Nguyen, Cuong & Tran, Tuyen & Vu, Huong, 2021. "The Long-Term Effects of War on Foreign Direct Investment and Economic Development: Evidence from Vietnam," MPRA Paper 111891, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:111891
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    Keywords

    War; FDI; unexploded ordnance; local development; Vietnam.;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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