Vietnam is popular for its rich natural resources, an abundant labour force and a stable political situation. However, the phenomenon of foreign direct investment (FDI) into Vietnam only emerges after the introduction of the reform policy - Doi Moi in 1986 and the enactment of the Law on Foreign Investment in 1987. These open policies resulted in a strong recovery in economic growth. Although there are few empirical studies that investigate the role of FDI, these studies only focus on some of the features that attract more FDI inflows. There is still a lack of an in-depth empirical analysis of FDI spillover effects on productivity growth in Vietnam. Therefore, this thesis aims to provide an in-depth analysis of FDI spillover effects on productivity growth in Vietnam through a multi-level approach. Particularly, this thesis concentrates on three primary aspects: the influences of FDI spillovers on the productivity of Vietnamese firms; the role of absorptive capacity on FDI spillover productivity; and the impact of spatial FDI spillovers on TFP growth among Vietnamese provinces. The thesis starts with an in-depth analysis of FDI spillover effects on the productivity of domestic firms in Vietnam. Employing a dataset of all Vietnamese firms over the sample period 2000-2014, the findings show negative signs of FDI horizontal spillovers and positive impacts of FDI backward spillovers on the productivity of local firms. By determining these effects, this thesis supports the continued fiscal and monetary incentives from Vietnamese governments to both foreign investors and domestic firms in the same industry or across industrial sectors.Absorptive capacity plays an important role in deriving benefits from foreign investments. Using a provincial dataset over the period 2005 to 2014, research in this thesis empirically investigates the absorptive capacity threshold, through the degree of human capital in promoting productivity growth and attracting FDI. Research finds the existence of human capital threshold that impacts FDI productivity spillovers. The determination of a human capital threshold enables local governments to propose a clear target for human capital levels for all Vietnamese provinces and cities. In other words, policymakers need to focus on improving a well-educated workforce for provinces under the threshold level. Furthermore, this thesis also indicates a heterogeneous FDI productivity spillover distribution across Vietnamese provinces. Therefore, it is essential to retain stable development in the key economic provinces, and focus on improving infrastructures, education and other financial incentives in provinces that receive less FDI spillovers. It is expected that the benefits from FDI spillovers will vary and diversify across the provinces and regions of Vietnam.Finally, this thesis also offers some general policy implications for the Vietnamese government and local provincial governments to ensure the competitive advantages of local firms and encourage foreign investments across industries and provinces. The policies focus on local infrastructure development, modernising legal and political institutions, the developing government-funded programs and so on. In addition, the development of training centres, vocational colleges and universities are essential to decrease the technology gap between local economies and foreign firms.
Date of Award | 2019 |
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Original language | English |
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- investments
- foreign
- human capital
- industrial productivity
- business enterprises
- government policy
- Vietnam
Foreign direct investment in Vietnam
Ho, N. T. T. (Author). 2019
Western Sydney University thesis: Doctoral thesis