Foreign direct investment in provinces: A spatial regression approach to FDI in Vietnam
AbstractForeign direct investment (FDI) flows into Vietnam have increased significantly in recent years, with unequal distribution between provinces and regions. We aim to contribute to the literature on locational determinants of FDI by accounting for spatial interdependence between 62 Vietnamese provinces from 2006-2009. For this purpose, we estimate a spatial lag model using maximum likelihood estimation method. We report existence of spatial dependence between provinces as well as spatial spill-over effects. The results are robust to different specifications for weight matrices and inclusion of different explanatory variables and/or proxies. We also report that conventional determinants of FDI such as market size, domestic investment, openness to trade, labour cost, education and governance, etc. are significant and remain robust to inclusion of spatial interdependence. The sign of the spatial dependence suggests that the distribution of FDI between provinces is subject to conglomeration effects.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 36145.
Date of creation: 20 Dec 2011
Date of revision: 05 Jan 2012
Foreign direct investment; spatial dependence; conglomeration; Vietnam;
Find related papers by JEL classification:
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-02-08 (All new papers)
- NEP-CWA-2012-02-08 (Central & Western Asia)
- NEP-DEV-2012-02-08 (Development)
- NEP-GEO-2012-02-08 (Economic Geography)
- NEP-INT-2012-02-08 (International Trade)
- NEP-PBE-2012-02-08 (Public Economics)
- NEP-TRA-2012-02-08 (Transition Economics)
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