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Technology transfers, foreign investment and productivity spillovers: evidence from Vietnam

Author

Listed:
  • Carol Newman

    () (Institute for International Integration Studies, Trinity College Dublin and Department of Economics, Trinity College Dublin)

  • John Rand

    () (Department of Food and Resource Economics, University of Copenhagen)

  • Theodore Talbot

    () (Department of Economics, University of Copenhagen)

  • Finn Tarp

    () (UNU-WIDER, Helsinki and Department of Economics, University of Copenhagen)

Abstract

This paper provides new evidence on the relationship between foreign direct investment (FDI) and the productivity of domestic firms. Using a specially designed survey on a sample of over 7,500 manufacturing firms in Vietnam we uncover some of the mechanisms that explain productivity spillovers from FDI through vertical linkages along the supply chain. Our results suggest that domestic firms experience more productivity spillovers through forward linkages from foreign-input suppliers to domestic input users than through backward linkages from foreign customers to domestic producers of inputs. Productivity externalities from upstream sectors are associated with joint venture foreign investors while downstream sectors experience direct technology transfers from upstream wholly foreign owned investors. Spillovers from FDI through backward linkages are also detected but only when competition from imported intermediates is controlled for and are associated with innovations and technology investments made by firms.

Suggested Citation

  • Carol Newman & John Rand & Theodore Talbot & Finn Tarp, 2014. "Technology transfers, foreign investment and productivity spillovers: evidence from Vietnam," The Institute for International Integration Studies Discussion Paper Series iiisdp440, IIIS.
  • Handle: RePEc:iis:dispap:iiisdp440
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    References listed on IDEAS

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    More about this item

    Keywords

    Foreign direct investment; productivity spillovers; technology transfers; absorptive capacity; Vietnam;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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