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A new regression-based revealed comparative advantage index is used to analyze Vietnam’s exports. Vietnam now has the highest comparative advantage in electronics in the world. It suggests that Vietnam may be a new follower in the “flying geese” style and reinforces the Kojima (2000) view that sufficient inward FDI can change comparative advantage. With detailed FDI and local data, we estimate that this change was brought about by a massive surge of inward FDI amounting to 6% of GDP. Lastly, we opine that while the comparative advantage in footwear may decline, that in electronics may be here to stay.

Vietnam’s Ascendancy in the Electronics Trade and the Role of Inward Foreign Direct Investment