Doctoral dissertation: FDI spillover effects on Vietnam textile enterprises

The aim of the thesis: The thesis is aimed at reviewing theories about FDI spillover effects on domesticenterprises, indicating a number of channels through which FDI spillover effects on Vietnamtextile enterprises are transferred; In addition, the thesis analyzes and deletes the reality of FDIspillover effects on Vietnam textile enterprises. As a result, several major factors affecting FDIspillover effects on Vietnam textile enterprises are pointed out.
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Doctoral dissertation: FDI spillover effects on Vietnam textile enterprises 1 INTRODUCTION 1. The essence of the thesis Foreign direct investment (FDI) plays an important role in developing the socio-economyin developing countries, including Vietnam. Vietnam has attracted and utilized FDI for 25years, but there have been a lot of problems. The amount of FDI in enterprises, particularly intextile and garment businesses is still low. The textile industry has developed well and has become one of the major industries ofVietnam. However, textile and garment enterprises are now facing difficulties and challenges.Although the quality and models of textile and garment products have been improved, theyhave still proved poor. In addition, there are few overseas markets. Owing to the increasinglysevere criteria, Vietnamese enterprises need to modernize technology, renovate management,improve the human recourses, improve modes and comply with international regulations andstandards in order to increase their competitiveness. With the existence of FDI, Vietnamenterprises will have to improve their productivities and business performance, boosting theprocess of transferring modern technology, improving local workforce in all aspects.Furthermore, FDI has consolidated the relation between FDI enterprises with domesticsuppliers, leading to higher productivities and better performance in textile enterprises andultimate economic growth of the country. The FDI quantitative effects on the economy have been researched and analyzed in the world. Alot of research has found out that FDI spillover effects can be positive, negative, or mixed. In Vietnam, although a lot of research on FDI spillover effects on domestic enterprises hasbeen conducted, no research has been made about those on Vietnam textile enterprises.Therefore, the author has decided to carry out research on “FDI spillover effects on Vietnamtextile enterprises”. 2. The aim of the thesis - The thesis is aimed at reviewing theories about FDI spillover effects on domesticenterprises, indicating a number of channels through which FDI spillover effects on Vietnamtextile enterprises are transferred; In addition, the thesis analyzes and deletes the reality of FDIspillover effects on Vietnam textile enterprises. As a result, several major factors affecting FDIspillover effects on Vietnam textile enterprises are pointed out. - The thesis also makes several recommendations for taking the advantages of positivespillover effects and limiting the negative ones on Vietnam textile enterprises. 3. An overall review of the research 3.1. Research in other countries A lot of researches have been done regarding FDI effects on domestic enterprises. Sgard(2001) has pointed out that FDI creates positive spillover effects on TFP. Haddad and Harrison(1993) have concluded that enterprises with high ratios of FDI create lower productivities thanenterprises with lower ratios of FDI. By using network data, Begoa and Sancher-Robles (2003)have indicated that FDI creates positive spillover effects on the economy when the investedcountries posse a good human resources, stable economies and free markets. According toLaura Alfaro (2003), FDI creates positive spillover effects on the productivities of processingenterprises and negative spillover effects on agriculture and mining industries. Javorcik (2004)has shown the positive spillover effects of FDI enterprises on medium of the domestic 2enterprises in Lithuania, increasing productivities and supplies made by domestic enterprises. Bwalya (2005), in Zambia, has indicated 3 main results: (i) FDI enterprises createsnegative effects on domestic enterprises via across links; (ii) Domestic enterprises may getbenefits from FDI enterprises’ participation; (iii) With the assistance from FDI enterprises,domestic ones will be able to increase their productivities and change their regionalinvestments. By using data collected in the manufacturing field in Lithuania, Smarzynska(2002) has indicated that an increase of 10% of FDI enterprises’ participation in later stages ofthe production leads to an increase of 0.38% of the outputs of domestic enterprises. FDIenterprises selling in domestic markets obtain higher productivities than those selling inoverseas markets. The author also points out that there are no differences between state-ownedenterprises and joint-ventures or foreign-owned ones. These results are corresponding to theintellectual spillover effects from FDI enterprises on local suppliers. However, these are alsoresulted from the increasing competition in industries belonging to the earlier productionprocess. 3.2. Research in Vietnam In Vietnam, there has been some research on FDI spillover effects on domestic enterprises.Le Thanh Thuy (2007) determines the level of FDI effects on productivities in Vietnamenterprises and points out that the gap in technology is one of the most decisive factors.Enterprises with advanced technology are able to absorb technological transfer from MNCs.Le Quoc Hoi and Richard Pomfret (2008) have found out that FDI creates technological effectshorizontally. These effects occur in private enterprises and domestic enterprises with lowresearch and development index. Le Quoc Hoi (2008) has explored data in enterprises in theperiod 2000-204 and applied Cobb-Douglas equation to find out the evidence about theadverse link between FDI enterprises with domestic ones. Nguyen Khac Minh (2008) hasindicated that the ratio of capital in FDI enterprises tend to increase in domestic enterprises,and does not find effects in domestic enterprises both horizontally and vertically. Moreover,the ability to absorb capital of these enterp ...