intl ivmt - g4 - dtue.1 presentation
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PRESENTED BY group 4
Foreign Direct Investment & Export
Spillovers:Evidence From Vietnam
International
Investment
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Introduction: Obectives
The existing International business literature suggests that the presense of foreign firms in a
country can benefit domestic firms through the formation of inter-firm linkages. These linkages
can take various forms. The objectives of this research is to examines the impact of horizontal
and vertical (backward and forward linkages (between domestic and foreign firms on!
!"# T$e decision o% domestic %irms to e&port
!'# T$e e&port s$are o% domestic %irm
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Introduction: %ocus
Vietnam - a country that has
attracted significant FDI since the
late 1908s !he introduction of
reform policy "no#n as Doi $oi in
198%& mar"ed the 'eginning of
opening up of the Vietnamese
economy #hich resulted in a
significant inflo# of foreign
investment
FDI has played an important role in
the rapid economic gro#th in
Vietnam
!he impact of FDI-related
industrial lin"ages on e(port
spillovers in Vietnam )n analysis
of the indirect effect of FDI on
Vietnam e(port performance
allo#s one to assess the
effectiveness of government
policies
Based on a large number o% t$e e&isting studies since '!!!( t$is paper clari%ied several important points and put%or)ard conclusions %or t$e issue *DI and e&port spillovers in +ietnam#
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T$eor. %rame)or/
".#. The presence of $%& and its impact on the host
countries
!"# E&plaining t$e impact o% 0N1s )it$ O-I and IDP %rame)or/s#
!'# T$e impact o% *DI on local %irms in developingcountries#
!2# T$e spreading e%%ect o% 0N1s in $ost countries#
".". The presence of $%&s in developingcountries can facilitate technology transfer from
developed to the developing countries.
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Emperical models 3ND data*mpirical model is 'ased on )it"en at al31995& 6reena#ay et al370045 and neller and +isu 37005 !he model
consists of t#o euations as a'ove:
Exportijt %5 1apital6 Intensit.it( 7uman61apitalit( Scaleit(1oncentrationt( Tec$nolog.68apit( *inancial6Developmentit(*DISpilloversit( 9it
Export_intensityijt g5 1apital6 Intensit.it( 7uman61apitalit( Scaleit(
1oncentrationt( Tec$nolog.68apit( *inancial6Developmentit(*DISpilloversit( ;it
;here:< Capital_ Intensityijtis capital stoc" per employee in million V.D at time t< Human_Capitalijt is measured 'y total #ages and training costs per employee in million V.D< Scaleijtis measured 'y sales of firm I relative to the average firm sales in the same sector< Technology_Gapijtis the percentage difference 'et#een the average productivity of foreign firm
and that of domestic firms in the same industry
< Concentrationijtis measured 'y means of the erfindahl inde( for domestic firms
< Financial_Developmentijtof firm I in industry = at time is measured 'y #or"ing capital as a
proportion of total assets
< FDISpilloversijtcan occur through hori>ontal and vertical lin"ages 'et#een domestic and foreignfirms
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Emperical models 3ND data
8eneral Statistics O%%ice o% +ietnam
T$e dataset is a cross
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Emperical results andanal.sis
< !he impact of hori>ontal lin"ages on the decision to e(port and e(port share is
< positive for 'oth private and state-o#ned firms
< 'ut the effect is highly significant only for state o#ned firms
< o#ever& state-o#ned firms do not gain any 'enefits from vertical lin"ages #ith
foreign firms #ith foreign firms
< +rivate firms are relatively more innovative and have 'etter access to gooduality intermediate inputs& #hich helps to reduce production costs )s a
result& private firms are a'le to increase their mar"et share too and gain 'enefits
through vertical lin"ages
T$e Impact o% *irm O)ners$ip and Industr.Structure on E&port Spillovers
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Emperical results andanal.sis
< !he presence of e(port-oriented foreign firms not only significantly increase
the pro'a'ility that domestic firms in the same industry #ill 'ecome involved
in e(porting 'ut it also leads a significant increase in their e(port intensity
< !he presence of domestic mar"et oriented foreign firms in V. has the
opposite effect
+resence of significant imitation and "no#ledge spillover effect among
V.?s manufacturing firms
Decrease the sun" costs associated #ith e(port activities
T$e Impacts o% t$e Presence o% bot$ E&portOriented and Domestic 0ar/et Oriented *oreign*irms on E&port Spillovers
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1onclusion
!he impact of vertical and hori>ontal
lin"ages 'et#een domestic and foreign
companies to e(plain:
< !he e(porting decision of domestic
companies
< *(porting shares of domestic
companies
!he impact of FDI on the economy of the
host country through direct and indirect
channels FDI is seen as a developing
mean of technology transfer It can 'oostproductivity and contri'ute significantly to
the development of production !he
presence of the foreign companies may
also affect the decision of domestic
companies as #ell as their e(porting
mar"et share
Issue " Issue '
This essay studies on " main issues!
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T73N@S *OR YO,R TI0E
INTERNTI!N" IN#EST$ENT % GR!&' (
)oreign *irect Investment + ,xport pillovers!
,vidence )rom ietnam
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