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A Spatial Regression Approach To Fdi In Vietnam: Province-Level Evidence

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  • BULENT ESIYOK

    (Faculty of Economics and Administrative Sciences, Baskent University, Ankara, Turkey)

  • MEHMET UGUR

    (Business School, University of Greenwich, Old Royal Naval College, 30 Park Row, London, SE10 9LS, UK)

Abstract

Foreign direct investment (FDI) flows into Vietnam have increased significantly in recent years and are distributed unequally between provinces. This paper aims to investigate the locational determinants of FDI in 62 Vietnamese provinces and whether spatial dependence is a significant factor that both researchers and policy-makers should take into account. We report that province-specific per-capita income, secondary education enrolment, labor costs, openness to trade, and domestic investment affect FDI directly within the province itself and have indirect effects on FDI in neighboring provinces. The direct and indirect effects coexist with spill-over effects and spatial dependence between provinces. Our findings indicate that FDI in Vietnam reflects a combination of complex vertical and export platform motivations on the part of foreign investors; and an agglomeration dynamics that may perpetuate the existing regional disparities in the distribution of FDI capital between provinces.

Suggested Citation

  • Bulent Esiyok & Mehmet Ugur, 2017. "A Spatial Regression Approach To Fdi In Vietnam: Province-Level Evidence," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 62(02), pages 459-481, June.
    • Handle: RePEc:wsi:serxxx:v:62:y:2017:i:02:n:s0217590815501155
    DOI: 10.1142/S0217590815501155
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    3. Olabode Philip Olofin & Oluwole Oladipo Aiyegbusi & Abayomi Ayinla Adebayo, 2019. "Analysis of Foreign Direct Investment and Economic Growth in Nigeria: Application of Spatial Econometrics and Fully Modified Ordinary Least Square (FMOLS)," Foreign Trade Review, , vol. 54(3), pages 159-176, August.
    4. The Nguyen Huynh, 2022. "Dynamic spatial effects of determinants of foreign direct investment: A case of the southern key economic region of Vietnam," Australian Economic Papers, Wiley Blackwell, vol. 61(3), pages 436-454, September.
    5. Lisha He, 2022. "Spatial Linkages in Chinese Service and Manufacturing Outward Fdi: Empirical Evidence From the United States," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 113(5), pages 450-468, December.
    6. Tran Toan Thang & Thi Song Hanh Pham & Bradley R. Barnes, 2016. "Spatial Spillover Effects from Foreign Direct Investment in Vietnam," Journal of Development Studies, Taylor & Francis Journals, vol. 52(10), pages 1431-1445, October.
    7. Thi-Nham Le & Thanh-Tuan Dang, 2022. "An Integrated Approach for Evaluating the Efficiency of FDI Attractiveness: Evidence from Vietnamese Provincial Data from 2012 to 2022," Sustainability, MDPI, vol. 14(20), pages 1-25, October.
    8. Adolfo Maza & Paula Gutiérrez‐Portilla & José Villaverde, 2020. "On the drivers of UK direct investment in the Spanish regions: A spatial Durbin approach," Growth and Change, Wiley Blackwell, vol. 51(2), pages 646-675, June.

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    More about this item

    Keywords

    Foreign direct investment; spatial dependence; agglomeration; Vietnam;
    All these keywords.

    JEL classification:

    • 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
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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