Foreign direct investment, productivity differentials and spillover a case of the Vietnames manufacturing sector | |
| Author | Truong Thi Ngoc Thuyen |
| Call Number | AIT Diss. no.SM-16-03 |
| Subject(s) | Investments, Foreign--Vietnam Manufacturing industries--Vietnam--Employees--Case studies Investments, Foreign--Vietnam Manufacturing industries--Vietnam--Employees--Case studies |
| Note | A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Management, School of Management |
| Publisher | Asian Institute of Technology |
| Abstract | Purpose: Developing economies often encourage investment of multinational enterprises in the hope that the external resources will contribute to improvement in the production and management competencies. The technical diffusion which explicated by productivity spillover of local firms is among the highest interest. However, the fact that spillover existence also depends on the reaction and conditions of the host country. The prerequisite factor for productivity spillover occur is the productivity gap between multinational enterprises and indigenous firms. This research targets on estimating the productivity differentials between MNEs and non-MNEs and the productivity spillover from the presence of foreign multinational enterprises (MNEs) to local private firms. The prominence of the study is conducting further exploration on whether there is the synesthetic impact between trade liberalization and foreign investment openness in those empirical issues. The role MNE ownership mode is also examined. Design/methodology/approach: We constructed the estimate models based on the flexible translogarithm production function with the firm-level panel data in Vietnamese manufacturing during 2005-10. For each empirical research questions, the estimates were conducted with two models, one for the overall estimates and another where MNE ownerships are considered separately. To avoid the potential endogeneity problem, lag of capital and labour factors were applied. Disaggregation by two sub-periods and three levels of labor intensity provided robustness checks. Findings: The results derived following important remarks. For productivity differentials, the results show that MNEs in both wholly foreign and joint venture ownership modes have higher productivity than local non-affiliated firms. Trade liberalization helps to lower the productivity differentials between MNEs and local private firms, but only for MNEs applying wholly foreign ownership mode. By disaggregation, the result of labor intensive industry tends to resemble the overall result. Trade liberalization tends to help lower productivity differentials between WO MNEs and local private firms in intermediate labor intensive industry but become insignificant in the capital intensive industry. In terms of spillover, our results show the negative and direct spillover from MNEs. The negative impact is contributed mainly by the wholly-foreign MNEs while joint ventures generate positive spillover. Random effects estimates also indicate that import protection reduces local firm productivity and weakens the effect of spillover from all MNEs. Results are similar in samples of labour-intensive industries, which include close to three-fourths of all sample firms, but differ markedly for more capital-intensive groups. Practical implications: This research contributes to the literature by adding empirical evidence in an emerging and transition country context. There is the existence of the synthetic impact between MNEs openness and trade protection regime. Therefore, host country should also consider to the level of trade liberalization in complying with the MNE attraction policy. To the specific condition of the examined host country, the results imply the requirement to enhance productivity as the growth engine. The study provides crucial implication to further policy to enhance spillover in the host country. iv Originality/ Value: Only few studies do look at both productivity differentials and spillover in Vietnam. Ownership mode is examined along with the role of trade policy. Productivity differentials and spillover are examined by level of capital intensity. |
| Year | 2016 |
| Type | Dissertation |
| School | School of Management |
| Department | Other Field of Studies (No Department) |
| Academic Program/FoS | Doctor of Philosophy in Management (Publication code = SM) |
| Chairperson(s) | Juthathip Jongwanich |
| Examination Committee(s) | Badir, Yuosre;Ang, James B.; |
| Scholarship Donor(s) | Ministry of Education and Training (MOET) Vietnam; |