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Does foreign investment benefit the exporting activities of Vietnamese firms?
Author(s) -
Ha Van,
Holmes Mark J.,
Hassan Gazi
Publication year - 2020
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12912
Subject(s) - vietnamese , foreign direct investment , upstream (networking) , tertiary sector of the economy , panel data , business , investment (military) , international economics , manufacturing sector , service (business) , monetary economics , economics , international trade , macroeconomics , politics , marketing , econometrics , computer network , philosophy , linguistics , computer science , political science , law
Abstract Using firm‐level data, this paper examines the effects of foreign investment on the exporting behaviour of domestic firms in the Vietnamese manufacturing and service sectors. Applying the Heckman selection model on panel data and following the Wooldridge approach, we find that investment by foreign firms has a significant positive effect on the decision of domestic firms in the same and upstream sectors to export. The proportion of exports of domestic firms declines through horizontal and forward linkages, but increases through backward linkages in the manufacturing sector. However, there is only weak evidence in support of export spillovers on domestic firms in the service sector. We also find that the presence of foreign firms has differing effects on the exporting activities of low‐ versus high‐tech firms in the manufacturing sector.