Technology Spillover Effects and Policies: Evidence from Vietnam
Abstract
The paper examines empirical research on technology spillover effects from foreign invested enterprises (FIEs) to domestic manufacturing and processing firms in the North of Vietnam in 2016-2018 period. The Hausman test demonstrates Fixed Effects Model is suitable for the most-updated panel data. The empirical results indicate that FIEs create a pervasive effect on the productivity of domestic manufacturing and processing firms. However, the technology spillover effect depends on characteristics of domestic enterprise. Accordingly, the capitalization rate and production scale are positively correlated with technology spillover while the technology gap is negatively. This finding is useful for authorities to map out policies for domestic firms to absorb more effectively technology spillover effect from FIEs.
References
[2] Aitken, B.J., and Harrison, A.E. 1999. Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela, American Economic Review, Vol. 89, 605–618. http://dx.doi.org/10.1257/aer.89.3.605.
[3] Fujimori, A., and Sato, T. 2015. Productivity and technology diffusion in India: The spillover effects from foreign direct investment, Journal of Policy Modeling, Vol. 37, 630–651.DOI: 10.1016/j.jpolmod.2015.04.002.
[4] Baltagi, B. 2008. Econometric Analysis of Panel Data. (5th ed. ed.). New York: John Wiley & Sons Inc.
[5] Bhagwati, J. 1973. The Theory of Immiserizing Growth: Further Applications’, in M. B. Connolly, and A. K. Swoboda., eds. International Trade and Money, University of Toronto Press, Toronto.
[6] Bin Ni, Spatareanu, M., Manole, V., Otsuki, T., and Yamada, H. 2017. The origin of FDI and domestic firms’ productivity-Evidence from Vietnam, Journal of Asian Economics, Vol. 52, 56-76. Available at SSRN: https://ssrn.com/abstract=3061329.
[7] Blalock, G., Gertler, P. 2009. How Firm Capabilities Affect Who Benefits from Foreign Technology. Journal of Development Economics, Vol. 90, No. 2, 192–99.
[8] Pham, B.N. 2012. Trade Liberalization and Productivity Spillover from Different Foreign Direct Investment Sourcing Origins. Journal of International Business Research, Vol.11, No. 3, 71-88.
[9] Caves, R.E. 1974. Multinational Firms, Competition, and Productivity in Host-country Markets. Economica, Vol. 41, No.162, 176-193.
[10] Orlic, E., Hashi, I., and Hisarciklilar, M. 2018. Cross sectoral FDI spillovers and their impact on manufacturing productivity. International Business Review, Vol. 27, 777-796. DOI: 10.1016/j.ibusrev.2018.01.002.
[11] Farole, T., Winkler, D. 2014. Making Foreign Direct Investment Work for Sub-Saharan Africa: Local Spillovers and Competitiveness in Global Value Chains. Directions in Development-Trade; Washington, DC: World Bank. © World Bank. https://openknowledge.worldbank.org/handle/10986/16390 License: CC BY 3.0 IGO.
[12] Farole, T., and Winkler, D. 2015. The Role of Foreign Firm Characteristics, Absorptive Capacity and the Institutional Framework for FDI Spillovers. Journal of Banking and Financial Economics,Vol. 1, No. 3, 77-112.
[13] Hale, G., and Long, C. 2011. Are the productivity spillovers from foreign direct investment in China? Pacific Economic Review, 16 (2), 135-153. SSRN: https://ssrn.com/abstract=1830939 or http://dx.doi.org/10.1111/j.1468-0106.2011.00539.x.
[14] Globerman, S. 1979. Foreign Direct Investment and Spillover Efficiency Benefits in Canadian Manufacturing Industries. Canadian Journal of Economics, Vol. 12, No.4, 42-56.
[15] Gujarati, D. 2011. Econometrics by Example. London: Palgrave Macmilan.
[16] Imbriani, C., Pittiglio, R., Reganati, F., and Sica, E. 2014. How Much do Technological Gap, Firm Size, and Regional Characteristics Matter for the Absorptive Capacity of Italian Enterprises? International Advances in Economic Research, Vol. 20, No.1, 57-72. DOI: 10.1007/s11294-013-9439-7.
[17] Jaccard, J., and Turrisi, R. 2003. Interaction Effects in Multiple Regression, New York: Sage.
[18] Jordaan, J. 2011. Local Sourcing and Technology Spillovers to Mexican Suppliers: How Important are FDI and Supplier Characteristics? Growth and Change, Vol. 42, No. 3, 287-319. https://doi.org/10.1111/j.1468-2257.2011.00554.x.
[19] Hayes, A.F. 2013. Introduction to Mediation, Moderation, and Conditional Process Analysis: A Regression-based Approach. New York: The Guilford Press. https://doi.org/10.1111/jedm.12050.
[20] Hausman, J. 1978. Specification Tests in Econometrics. Econometrica, Vol. 46, 1251-1271.
[21] Kohpaiboon, A. 2006. Foreign Direct Investment and Technology Spillover: A Cross-industry Analysis of Thai Manufacturing. World Development, Vol. 34, No.3, 541-556.
[22] Le, H.Q., and Pomfret, R. 2011. Technology Spillovers from Foreign Direct Investment in Vietnam: Horizontal or Vertical Spillovers? Journal of the Asia Pacific Economy, Vol. 16, No. 2, 183-201. https://doi.org/10.1080/13547860.2011.564746.
[23] Li, X., Liu, X., and Parker, D. 2001. Foreign Direct Investment and Productivity Spillovers in the Chinese Manufacturing Sector. Economic System, Vol. 25, 305-321.
[24] Lin M., Kwan, Y.K. 2016. FDI technology spillovers, geography, and spatial diffusion. International Review of Economics and Finance, Vol. 43, 257-274. DOI: 10.1016/j.iref.2016.02.014.
[25] Newman, C., Rand, J., Talbot, T., and Tarp, F. 2013. Technology Transfer, Foreign Investment and Productivity Spillover: Evidence from Vietnam. Trinity College Dublin. http://ciem.org.vn/portals/1/ciem/indepthstudy/tcs12_technology_transfer_final.pdf (Access on Jan. 2019).
[26] Nguyen, N.A. et al. 2008. Foreign Direct Investment in Vietnam: Is There any Evidence of Technological Spillover Effects. Munich Personal Re PEc Archive, No. 7273, posted 20, February, 2008. https://www.researchgate.net/publication/4810215.
[27] Paitoon, W., Chayanon, P., and Nuchit, P. 2016). Spillover effects of foreign direct investment on domestic manufacturing firms in Thailand. The Singapore Economic Review, Vol. 61, No. 2, https://doi.org/10.1142/S0217590816400282.
[28] Petersen, M.A. 2009. Estimating Standard Errors in Finance Panel Data Sets: Comparing Approaches. Review of Financial Studies, Vol. 22, No.1, 435-480.
[29] Nguyen, P.L. 2008. Productivity Spillovers from Foreign Direct Investment: Evidence from Vietnamese Firm Data. https://ssrn.com/abstract=1101203 or http://dx.doi.org/10.2139/ssrn.1101203.
[30] Ramanathan, R. 2002. Introductory Econometrics with Applications. Harcourt Brace College Publishers.
[31] Sinani, E. and Meyer K. (2004),’Spillovers of technology transfer form FDI: The case of Estonia’, Journal of Comparative Economics, Vol.32, No.3,pp.455-466.DOI:10.1016/j.jce.2004.03.002.
[32] Smeets, R. 2008. Collecting the pieces of the FDI knowledge spillovers puzzle. World Bank Research Observer, Vol. 23, No.2, 107-138.
[33] Senzu, E.T. 2018. Investment attraction, competition and growth; theoretical perspective in the context of Africa. Theoretical and Practical Research in the Economic Fields, Vol. 9, No.1, 92-102.
[34] https://journals.aserspublishing.eu/tpref/article/view/2240, Date accessed: May 26, 2020.
[35] Sun, S. 2009. How does FDI Affect Domestic Firms’ exports? Industrial Evidence. The World Economy, Vol. 32, 1203-1222.
[36] Sun, S. 2011. Foreign Direct Investment and Technology Spillovers in China’s Manufacturing Sector. Chinese Economy, Vol. 44, No. 2, 25-42.
[37] https://doi.org/10.2753/1097-1475440202.
[38] Masron, T.A., Zulkafli, A.H., and Ibrahim, H. 2012. Spillover Effects of FDI within Manufacturing Sector in Malaysia. Procedia – Social and Behavioral Sciences, Vol. 58, 1204-1211. https://doi.org/10.1016/j.sbspro.2012.09.1102.
[39] Thanh Thuy, Le. 2005. Technological Spillovers from Foreign Direct Investment: The Case of Vietnam’, imeo, Graduate School of Economics, University of Tokyo. https://www.researchgate.net/publication/242318931_.
[40] VanThanh, H., and Hoang, T.P. 2010. Productivity Spillovers from Foreign Direct Investment: The Case of Vietnam. in Hahn, C.H. and D. Narjoko., eds. Causes and Consequences of Globalization in East Asia: What Do the Micro Data Analyzes Show? ERIA Research Project Report, 2009, Vol.2, 228-246.
[41] http://gso.gov.vn: the website of General Statistical Office of Vietnam, (accessed: January 22, 2019).
[42] http://ciem.org.vn: the website of Central Institute of for Economic Management, (accessed: January 26, 2019).
The Copyright Transfer Form to ASERS Publishing (The Publisher)
This form refers to the manuscript, which an author(s) was accepted for publication and was signed by all the authors.
The undersigned Author(s) of the above-mentioned Paper here transfer any and all copyright-rights in and to The Paper to The Publisher. The Author(s) warrants that The Paper is based on their original work and that the undersigned has the power and authority to make and execute this assignment. It is the author's responsibility to obtain written permission to quote material that has been previously published in any form. The Publisher recognizes the retained rights noted below and grants to the above authors and employers for whom the work performed royalty-free permission to reuse their materials below. Authors may reuse all or portions of the above Paper in other works, excepting the publication of the paper in the same form. Authors may reproduce or authorize others to reproduce the above Paper for the Author's personal use or for internal company use, provided that the source and The Publisher copyright notice are mentioned, that the copies are not used in any way that implies The Publisher endorsement of a product or service of an employer, and that the copies are not offered for sale as such. Authors are permitted to grant third party requests for reprinting, republishing or other types of reuse. The Authors may make limited distribution of all or portions of the above Paper prior to publication if they inform The Publisher of the nature and extent of such limited distribution prior there to. Authors retain all proprietary rights in any process, procedure, or article of manufacture described in The Paper. This agreement becomes null and void if and only if the above paper is not accepted and published by The Publisher, or is with drawn by the author(s) before acceptance by the Publisher.