FDI and employment creation in the enterprise sector in Vietnam

Besides, a positive relation between the FDI intensity (in terms of the size of FDI in relative to the total capital resource) and the growth of employment in the domestic enterprise sector is found which implies that the relatively larger presence of FDI enterprises can have positive spillover effects on the domestic enterprise sector’s employment growth. However, the spillover effects of FDI are considered limited.
Nội dung trích xuất từ tài liệu:
FDI and employment creation in the enterprise sector in Vietnam VNU Journal of Science: Economics and Business, Vol. 36, No. 5E (2020) 81-91 Original Article FDI and Employment Creation in the Enterprise Sector in Vietnam Dao Thi Bich Thuy* VNU University of Economics and Business, 144 Xuan Thuy, Cau Giay, Hanoi, Vietnam Received 13 July 2020 Revised 19 December 2020; Accepted 19 December 2020 Abstract: Since the Foreign Investment Law was first promulgated in Vietnam in 1987, the inflows of FDI to the country have increased significantly over the years. Among the contributions of FDI to the socio-economic development of the country, interest is placed on employment creation. The purpose of this study is to assess the relation between FDI and employment creation in the enterprise sector in Vietnam. The empirical study is conducted at the local level with all 63 provinces nationwide in the period from 2006 to 2014. The results reveal that the FDI enterprise sector has a higher employment creation capability than the domestic enterprise sector. Besides, a positive relation between the FDI intensity (in terms of the size of FDI in relative to the total capital resource) and the growth of employment in the domestic enterprise sector is found which implies that the relatively larger presence of FDI enterprises can have positive spillover effects on the domestic enterprise sector’s employment growth. However, the spillover effects of FDI are considered limited. Keywords: FDI, employment, enterprise sector.1. Introduction * Investment Law and Domestic Investment Promotion Law. This Law creates a unity in the Foreign Investment Law was first legal system of investment that creates a fairpromulgated in Vietnam in 1987, setting an “playing field”, non-discriminates amongimportant milestone for the process of investors, simplifies investment procedures, andinternational economic integration. Through creates favorable conditions to attract andseveral times of amendments and supplements, effectively use of investment capital sources.to meet the requirements of international Since 1987, Vietnam witnessed remarkableeconomic integration and enhance the state increase in the flows of FDI into the country.management of investment activities, In general view, the FDI sector has becomeInvestment Law 2005 replaced Foreign an important part and increasingly contributes to_______* Corresponding author. E-mail address: thuydaokt@vnu.edu.vn https://doi.org/10.25073/2588-1108/vnueab.4381 https://doi.org/10.25073/2588-1108/vnueab.4381 8182 D.T.B. Thuy / VNU Journal of Science: Economics and Business, Vol. 36, No. 5E (2020) 81-91the socio-economic development of the country. enterprise sector in comparison with theFDI fosters economic growth as the sector domestic enterprise sector? Second, how FDIcontributes gradual increase to GDP over the enterprises have indirect effects on employmentyears. FDI promotes economic restructure and creation in the domestic enterprise sector? Theplays as an important factor for the development rest of the paper is organized as followed: Sectionof many modern industries. Through FDI, 2 presents the literature review on the effect of FDIVietnam has access to advanced technology of on employment, followed by Section 3the world to develop industries using modern overviewing the FDI enterprise sectortechnology such as biotechnology, development in Vietnam. Empirical study on FDItelecommunications, software industry, and employment creation is then provided inelectronics,... FDI helps to improve the country’s Section 4 and finally Section 5 is the conclusion.export capacity and expand export markets toother countries. FDI also contributes 2. Literature Review on the Effects of FDIsignificantly to the welfare of the country via on Employmentemployment creation and the state budgetrevenue cont ...