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FDI Horizontal and Vertical Effects on Local Firm Technical Efficiency

Author

Listed:
  • Chuc Dinh Nguyen

    (Aston Business School, Aston University, UK)

  • Gary Simpson

    (Aston Business School, Aston University, UK)

  • David Saal

    (Aston Business School, Aston University, UK)

  • Anh Ngoc Nguyen

    (Development and Policies Research Center (DEPOCEN), 216 Tran Quang Khai Street, Hanoi, Vietnam)

  • Ngoc Quang Pham

    (Development and Policies Research Center (DEPOCEN), 216 Tran Quang Khai Street, Hanoi, Vietnam)

Abstract

Differencing from previous studies on foreign direct investment (FDI) spillovers to domestic enterprises which mainly focus on productivity, in this paper we take a different perspective by analysing the impacts of FDI to technical efficiency of domestic firms. The paper goes beyond the current literature to shed some light on the spillover effects of FDI to technical efficiency of small and medium enterprises in a developing country. By exploiting a firm-level panel dataset and using SFA models following Battese and Coelli (1995), the paper is able to analyse horizontal spillovers through imitation and competition and labour mobility as well as vertical spillovers through backward and forward linkages on technical efficiency. The paper contributes to the understanding of potential effects on foreign invested enterprises on domestic economy in general and local enterprises performance in particular. Thus it importantly assists policy making by the government of developing countries, where FDI is believed to create technical spillovers on domestic enterprises.

Suggested Citation

  • Chuc Dinh Nguyen & Gary Simpson & David Saal & Anh Ngoc Nguyen & Ngoc Quang Pham, 2008. "FDI Horizontal and Vertical Effects on Local Firm Technical Efficiency," Working Papers 17, Development and Policies Research Center (DEPOCEN), Vietnam.
    • Handle: RePEc:dpc:wpaper:1708
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    Cited by:

    1. Tomas Havranek & Zuzana Irsova, 2011. "How to Stir Up FDI Spillovers: Evidence from a Large Meta-Analysis," William Davidson Institute Working Papers Series wp1021, William Davidson Institute at the University of Michigan.
    2. Binyam A. Demena & Peter A. G. van Bergeijk, 2017. "A Meta-Analysis Of Fdi And Productivity Spillovers In Developing Countries," Journal of Economic Surveys, Wiley Blackwell, vol. 31(2), pages 546-571, April.
    3. Duong, Vu Hoang, 2020. "The threshold of absorptive capacity: The case of Vietnamese manufacturing firms," International Economics, Elsevier, vol. 163(C), pages 44-57.
    4. Tomas Havranek & Zuzana Irsova, 2012. "Survey Article: Publication Bias in the Literature on Foreign Direct Investment Spillovers," Journal of Development Studies, Taylor & Francis Journals, vol. 48(10), pages 1375-1396, October.

    More about this item

    Keywords

    Technical Efficiency; Foreign Direct Investment; Spillovers;
    All these keywords.

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