IDEAS home Printed from https://ideas.repec.org/p/hai/wpaper/200801.html
   My bibliography  Save this paper

Is Foreign Direct Investment Good for Growth? Evidence from Sectoral Analysis of China and Vietnam

Author

Listed:
  • Tam B. Vu

    () (College of Business and Economics, University of Hawaii at Hilo)

  • Byron Gangnes

    () (Department of Economics, University of Hawaii at Manoa)

  • Ilan Noy

    () (Department of Economics, University of Hawaii at Manoa)

Abstract

We estimate the impact of FDI on growth using sectoral data for FDI inflows to China and Vietnam. Previous empirical studies, using either cross-country growth regressions or firm-level micro-econometric analysis, fail to reach a consensus. Our paper is the first to use sectoral FDI inflow data to evaluate the sector-specific impact of FDI on growth. Our results show that, for the two developing-transition economies we examine, FDI has a statistically-significant positive effect on economic growth operating directly and through its interaction with labor. Intriguingly, we find the effects seem to be very different across economic sectors, with almost all the beneficial impact limited to industrial sector. Other sectors appear to gain very little growth benefit from sector-specific FDI.

Suggested Citation

  • Tam B. Vu & Byron Gangnes & Ilan Noy, 2008. "Is Foreign Direct Investment Good for Growth? Evidence from Sectoral Analysis of China and Vietnam," Working Papers 200801, University of Hawaii at Manoa, Department of Economics.
  • Handle: RePEc:hai:wpaper:200801
    as

    Download full text from publisher

    File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_08-1.pdf
    File Function: First version, 2008
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jiang, Crystal X. & Yang, Qin & Li, Sali & Wang, Yong, 2011. "The moderating effect of foreign direct investment intensity on local firms' intangible resources investment and performance implications: A case from China," Journal of International Management, Elsevier, vol. 17(4), pages 291-302.
    2. Noy, Ilan & Vu, Tam B., 2007. "Capital account liberalization and foreign direct investment," The North American Journal of Economics and Finance, Elsevier, vol. 18(2), pages 175-194, August.
    3. repec:pid:journl:v:55:y:2016:i:2:p:95-111 is not listed on IDEAS
    4. Shimaa Elkomy & Hilary Ingham & Robert Read, 2015. "Economic, Institutional & Political Determinants of FDI Growth Effects in Emerging & Developing Countries," Working Papers 95922154, Lancaster University Management School, Economics Department.
    5. Kais Saidi & Sami Hammami, 2016. "Economic growth, energy consumption and carbone dioxide emissions: recent evidence from panel data analysis for 58 countries," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(1), pages 361-383, January.
    6. Li Shu & Aurora A.C. Teixeira, 2010. "The level of human capital in innovative firms located in China. Is foreign capital relevant?," FEP Working Papers 391, Universidade do Porto, Faculdade de Economia do Porto.
    7. Kubny, Julia & Voss, Hinrich, 2014. "Benefitting from Chinese FDI? An assessment of vertical linkages with Vietnamese manufacturing firms," International Business Review, Elsevier, vol. 23(4), pages 731-740.
    8. Maryia Akulava, 2011. "The Impact of Foreign Direct Investment on Industrial Economic Growth in Belarus," BEROC Working Paper Series 11, Belarusian Economic Research and Outreach Center (BEROC).
    9. Kais Saidi & Sami Hammami, 2016. "Economic growth, energy consumption and carbone dioxide emissions: recent evidence from panel data analysis for 58 countries," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(1), pages 361-383, January.
    10. 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.
    11. Abdul Khaliq & Ilan Noy, 2007. "Foreign Direct Investment and Economic Growth: Empirical Evidence from Sectoral Data in Indonesia," Working Papers 200726, University of Hawaii at Manoa, Department of Economics.
    12. Temiz, Dilek & Gökmen, Aytaç, 2014. "FDI inflow as an international business operation by MNCs and economic growth: An empirical study on Turkey," International Business Review, Elsevier, vol. 23(1), pages 145-154.
    13. Vu, Tam Bang & Noy, Ilan, 2009. "Sectoral analysis of foreign direct investment and growth in the developed countries," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 19(2), pages 402-413, April.
    14. Nguyen, Ngoc Anh & Nguyen, Thang, 2007. "Foreign direct investment in Vietnam: An overview and analysis the determinants of spatial distribution across provinces," MPRA Paper 1921, University Library of Munich, Germany.
    15. Tam Bang Vu & Ilan Noy, 2007. "Sectoral Analysis of Foreign Investment and Growth In the Developed Countries," Working Papers 200725, University of Hawaii at Manoa, Department of Economics.

    More about this item

    Keywords

    Foreign direct investment; growth; China; Vietnam;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hai:wpaper:200801. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Web Technician). General contact details of provider: http://edirc.repec.org/data/deuhius.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.