The Origin of FDI and Domestic Firms’ Productivity—Evidence from Vietnam

38 Pages Posted: 30 Oct 2017

See all articles by Bin Ni

Bin Ni

Toyo University - Business Administration

Mariana Spatareanu

Rutgers University Department of Economics and Division of Global Affairs

Vlad Manole

Rutgers University, Department of Economics

Tsunehiro Otsuki

Osaka University - Osaka School of International Public Policy (OSIPP)

Hiroyuki Yamada

International Monetary Fund (IMF)

Date Written: July 18, 2017

Abstract

This study examines how the origin of foreign investors affects the degree of horizontal and vertical technological spillovers, using firm-level panel data from Vietnam in 2002–2011. The results show a positive association between the presence of Asian firms in downstream sectors and the productivity of Vietnamese firms in supply industries, but no significant relationship in the case of European and North American affiliates. Within Asia,we find that foreign direct investment from China and Taiwan generates positive vertical spillovers to local suppliers. We hypothesize that distance, preferential trade agreements, and institutional or technological differences that affect the degree of local sourcing significantly impact vertical spillovers from foreign direct investment. The horizontal spillover effects are in general negative and statistically significant. Various robustness checks are performed.

Keywords: FDI, Spillovers, Total factor productivity, Vietnam

JEL Classification: D22, F14, F21, F23, O33

Suggested Citation

Ni, Bin and Spatareanu, Mariana and Manole, Vlad and Otsuki, Tsunehiro and Yamada, Hiroyuki, The Origin of FDI and Domestic Firms’ Productivity—Evidence from Vietnam (July 18, 2017). Journal of Asian Economics, 52 (2017) 56–76., Available at SSRN: https://ssrn.com/abstract=3061329

Bin Ni (Contact Author)

Toyo University - Business Administration ( email )

5-28-20 Hakusan
Bunkyo-ku
Tokyo, 112-8606
Japan

Mariana Spatareanu

Rutgers University Department of Economics and Division of Global Affairs ( email )

360 ML King Jr. Blvd.
Newark, NJ 07102
United States
973 353 5249 (Phone)
973 353 5819 (Fax)

Vlad Manole

Rutgers University, Department of Economics ( email )

360 Martin Luther King Jr.
Newark, NJ 07102
United States

Tsunehiro Otsuki

Osaka University - Osaka School of International Public Policy (OSIPP) ( email )

1-31, Machikaneyama
Toyonaka, Osaka 560-0043
Japan

Hiroyuki Yamada

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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