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Foreign Direct Investment in Vietnam: Is There Any Evidence Of Technological Spillover Effects

Author

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  • Anh Ngoc Nguyen

    () (Development and Policies Research Center (DEPOCEN), 216 Tran Quang Khai Street, Hanoi, Vietnam)

  • Nguyen Thang

    (Center for Analysis and Forecasting (CAF), No1 Lieu Giai Street, Hanoi, Vietnam)

  • Le Dang Trung

    (Center for Analysis and Forecasting (CAF), No1 Lieu Giai Street, Hanoi, Vietnam)

  • Ngoc Quang Pham

    (Development and Policies Research Center (DEPOCEN), 216 Tran Quang Khai Street, Hanoi, Vietnam)

  • Chuc Dinh Nguyen

    (Aston Business School, Aston University, UK)

  • Nhat Duc Nguyen

    (Development and Policies Research Center (DEPOCEN), 216 Tran Quang Khai Street, Hanoi, Vietnam)

Abstract

In the context of integrating more deeply into the world economy the Vietnamese policy makers have undertaken several measures to attract foreign direct investment to the country, with the culmination of FDI inflows in 2007 reaching over USD 20 billion, an increase of 69% over 2006. The policy has been taken on the ground that the FDI inflows will create employment and bring along the much needed technological advances, which will spill over to domestic firms. In this paper, we use a firm-level panel data constructed from the Census 2000-2005 to investigate not only the horizontal spillovers but also the backward and forward linkages. Adding to the current literature which focused mainly on the spillovers in the manufacturing sector, our paper provide the first estimates of the spillover effects in the service sector (at least in the context of developing countries). We also distinguish between the horizontal output spillovers (which capture demonstration effects and competition effects) and the horizontal employment spillover (which captures the labour mobility effect). The results obtained from our regression models are mixed. Different channels of spillovers are at work for the manufacturing and the service sectors. We find evidence of the positive backward technological spillovers for the manufacturing and positive horizontal spillovers for the service sector.

Suggested Citation

  • 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.
  • Handle: RePEc:dpc:wpaper:1808
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    References listed on IDEAS

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    1. Tam Vu & Byron Gangnes & Ilan Noy, 2008. "Is foreign direct investment good for growth? Evidence from sectoral analysis of China and Vietnam," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 13(4), pages 542-562.
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    Cited by:

    1. Nguyen, Anh & Nguyen, Mai & Doan, Hung, 2013. "The Viet Nam National Innovation System: A Diagnostic Review," MPRA Paper 58712, University Library of Munich, Germany.
    2. Czibik, Ágnes & Makó, Ágnes, 2009. "Kiszolgáltatottság és ösztönző erő a kiskereskedelmi láncok és beszállítóik kapcsolatában. Oksági elemzés beszállítói szemszögből
      [Defencelessness and incentive in the relation between retail chain
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(4), pages 359-378.
    3. 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.
    4. Cassey Lee & Dionisius Narjoko, 2015. "Escaping the Middle-Income Trap in Southeast Asia: Micro Evidence on Innovation, Productivity, and Globalization," Asian Economic Policy Review, Japan Center for Economic Research, vol. 10(1), pages 124-147, January.
    5. Mustapha K. Nabli, 2011. "The Great Recession and Developing Countries : Economic Impact and Growth Prospects," World Bank Publications, The World Bank, number 2539, January.
    6. Iršová, Zuzana & Havránek, Tomáš, 2013. "Determinants of Horizontal Spillovers from FDI: Evidence from a Large Meta-Analysis," World Development, Elsevier, vol. 42(C), pages 1-15.
    7. Eric Ramstetter, 2009. "Firm- and Plant-level Analysis of Multinationals in Southeast Asia: the Perils of Pooling Industries and Balancing Panels," Global COE Hi-Stat Discussion Paper Series gd09-106, Institute of Economic Research, Hitotsubashi University.
    8. Tomas Havranek & Zuzana Irsova, 2011. "How to Stir Up FDI Spillovers: Evidence from a Large Meta-Analysis," William Davidson Institute Working Papers Series wp1021, William Davidson Institute at the University of Michigan.
    9. 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.
    10. repec:bla:jecsur:v:31:y:2017:i:2:p:546-571 is not listed on IDEAS
    11. Menon, Jayant, 2009. "Managing Success in Viet Nam: Macroeconomic Consequences of Large Capital Inflows with Limited Policy Tools," Working Papers on Regional Economic Integration 27, Asian Development Bank.
    12. Nguyen, Huong, 2016. "Ease of Doing Business Reforms in Vietnam: Implications for Total Factor Productivity in Manufacturing Industries," Papers 999, World Trade Institute.
    13. 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.
    14. Franco, Chiara & Sanfilippo, Marco & Seric, Adnan, 2015. "What makes linkages "good" linkages? Firms, the investment climate and business support services in Vietnam," IOB Working Papers 2015.09, Universiteit Antwerpen, Institute of Development Policy (IOB).
    15. Anwar, Sajid & Nguyen, Lan Phi, 2014. "Is foreign direct investment productive? A case study of the regions of Vietnam," Journal of Business Research, Elsevier, vol. 67(7), pages 1376-1387.
    16. Gueorguiev, Dimitar & Malesky, Edmund, 2012. "Foreign investment and bribery: A firm-level analysis of corruption in Vietnam," Journal of Asian Economics, Elsevier, vol. 23(2), pages 111-129.
    17. Jean-Raphael Chaponniere & Jean-Pierre Cling, 2009. "Vietnam's Export-Led Growth Model and Competition with China," Economie Internationale, CEPII research center, issue 118, pages 101-130.
    18. Tomas Havranek & Zuzana Irsova, 2012. "Survey Article: Publication Bias in the Literature on Foreign Direct Investment Spillovers," Journal of Development Studies, Taylor & Francis Journals, vol. 48(10), pages 1375-1396, October.
    19. Hans Pitlik & Margit Schratzenstaller, 2011. "Growth Implications of Structure and Size of Public Sectors," WIFO Working Papers 404, WIFO.
    20. Anwar, Sajid & Nguyen, Lan Phi, 2011. "Foreign direct investment and export spillovers: Evidence from Vietnam," International Business Review, Elsevier, vol. 20(2), pages 177-193, April.
    21. 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.
    22. Sajid Anwar & Lan Nguyen, 2011. "Financial development and economic growth in Vietnam," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 35(3), pages 348-360, July.
    23. Nguyen, Huong, 2016. "Does Proximity to Foreign Invested Firms Stimulate Productivity Growth of Domestic Firms? Firm-level Evidence from Vietnam," Papers 1001, World Trade Institute.

    More about this item

    Keywords

    Foreign Direct Investment; Vietnam; technological spillovers;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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