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Foreign Direct Investment in Industrial Transition: The Experience of Vietnam

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  • Prema-chandra Athukorala
  • Tran Quang Tien

Abstract

This paper examines the role of foreign direct investment (FDI) in the process of industrial transition in Vietnam in the context of market-oriented reforms undertaken over the past two decades. The findings are consistent with the conventional wisdom that concomitant liberalization of trade and investment regimes, accompanied by creating a congenial environment for market-based decisions by the private agents, is vital for reaping developmental gains form FDI. During the 1990s growth of employment in foreign invested enterprises (FIEs) lagged behind output growth, reflecting the capitalintensity bias of production in a partially-liberalized economy. This pattern has changed notably in recent years as the reform process gained momentum. Of particular significance in this connection is the growing importance of assembly activities by FIEs in electronics and other high-tech industries.

Suggested Citation

  • Prema-chandra Athukorala & Tran Quang Tien, 2009. "Foreign Direct Investment in Industrial Transition: The Experience of Vietnam," Departmental Working Papers 2009-20, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:2009-20
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    References listed on IDEAS

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    1. World Bank, 2005. "Vietnam Business : Vietnam Development Report 2006," World Bank Publications - Reports 8314, The World Bank Group.
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    More about this item

    Keywords

    Vietnam; Asia; foreign direct investment; transitional economy; multinational enterprises;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • P23 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Factor and Product Markets; Industry Studies; Population

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