Does Proximity to Foreign Invested Firms Stimulate Productivity Growth of Domestic Firms? Firm-level Evidence from Vietnam

Kyburz, Stephan; Nguyen, Huong Quynh (October 2017). Does Proximity to Foreign Invested Firms Stimulate Productivity Growth of Domestic Firms? Firm-level Evidence from Vietnam (CRED Research Paper 16). Bern: CRED - Center for Regional Economic Development

[img]
Preview
Text
CRED_Research_Paper_No_16_def.pdf - Published Version
Available under License Creative Commons: Attribution (CC-BY).

Download (6MB) | Preview

Inward foreign direct investment (FDI) is regarded as a key engine of industrial
growth and technological progress, especially in emerging markets. Regarding the relevance of geographic proximity between foreign and domestic firms for FDI spillover effects, there is yet little clear evidence, owing to a lack of precise location specific firm-level data. This paper presents the so far spatially most detailed Analysis of FDI spillover effects by geo-referencing the census of Vietnamese enterprises for the period 2005 to 2010, allowing us to measure the changing presence of foreign invested firms around each domestic firm. We apply a first-differenced two-stageleast-squares estimator to identify spillover effects from proximate FDI exposure on TFP growth of domestic manufacturing firms. We find positive and significant within-industry (horizontal) spillover effects within radii of 2 to 10 km, that decay beyond. Importantly, in particular small and medium enterprises (SMEs) gain from foreign firms in their vicinity. Furthermore, vertical spillovers through forward and backward linkages to other manufacturing firms are localized, while vertical spillovers from foreign firms in the service sector are less geographically restricted.

Item Type:

Working Paper

Division/Institute:

02 Faculty of Law > Department of Economic Law > World Trade Institute
10 Strategic Research Centers > World Trade Institute

03 Faculty of Business, Economics and Social Sciences > Department of Economics
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics > Economic Policy and Regional Economics
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics
11 Centers of Competence > Center for Regional Economic Development (CRED)

UniBE Contributor:

Kyburz, Stephan Daniel and Nguyen, Huong Quynh

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics
300 Social sciences, sociology & anthropology > 380 Commerce, communications & transportation

Series:

CRED Research Paper

Publisher:

CRED - Center for Regional Economic Development

Language:

English

Submitter:

Melanie Moser

Date Deposited:

05 May 2020 11:19

Last Modified:

05 May 2020 11:19

Uncontrolled Keywords:

foreign direct investment, spillover effects, geographic proximity, horizontal and vertical linkages

JEL Classification:

D22, D24, F23, O12, O14, O33, R11, R32

BORIS DOI:

10.7892/boris.142286

URI:

https://boris.unibe.ch/id/eprint/142286

Actions (login required)

Edit item Edit item
Provide Feedback