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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. Copyright 2004 East Asian Economic Association.

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
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    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. Anze Burger & Crt Kostevc, 2006. "In search of true productivity differences," LICOS Discussion Papers 17006, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    5. repec:eee:asieco:v:55:y:2018:i:c:p:42-57 is not listed on IDEAS
    6. 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.
    7. 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.
    8. 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.

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