Determinants of Technological Diffusion via FDI Enterprises in the Manufacturing Sector in Vietnam over 2005-2013

Thanh Ngo-Quang; Thong Le-Van; Phuc Doan-Ngoc

doi:10.4236/oalib.1102043

Home > Journals > Biomedical & Life Sciences | Business & Economics > OALibJ

OALibJ> Vol.2 No.10, October 2015

Share This Article:

Open Access

Determinants of Technological Diffusion via FDI Enterprises in the Manufacturing Sector in Vietnam over 2005-2013

Abstract Full-Text HTML XML

Download as PDF (Size:279KB) PP. 1-12

DOI: 10.4236/oalib.1102043 718 Downloads 972 Views

Author(s) Leave a comment

Thanh Ngo-Quang¹, Thong Le-Van², Phuc Doan-Ngoc³

Affiliation(s)

¹Institute of Policy and Strategy for Agricultural and Rural Development, Ha Noi, Vietnam.
²Academy of Politics Region II, Ho Chi Minh National Academy of Politics, Ho Chi Minh City, Vietnam.
³University of Finance-Marketing, Ho Chi Minh City, Vietnam.

ABSTRACT

Much empirical research confirms that foreign enterprises are more efficient than domestic ones in the context of developing countries. However, while most studies support the hypothesis that foreign ownership participation increases performance of firms in terms of productivity and efficiency, some works find no differences, leading to a controversy on this issue. This study was designed to investigate and examine technological diffusion via FDI enterprises in manufacturing sector in Vietnam over the period 2005-2013. The paper finds that in general, the investigation revealed that FDI firms have more technical efficiency than domestic firms in most of manufacturing sub-sectors in Vietnam over the period 2005-2013. Factors affecting technological diffusion between all kinds of FDI and domestic manufacturing enterprises in Vietnam within the framework of this investigation are named as follows: 1) Firm’s past performance: Positive relationship between firms’ past performance and technical efficiency score, 2) Size of a firm in terms of labour and capital: Negative relationship between size of a firm in terms of labour and capital and technical efficiency scores, 3) The firms’ financial performance: Positive relationship between firms’ financial performance and technical efficiency scores, 4) The firms’ level of self-financing: Negative relationship between firms’ level of self-financing and technical efficiency scores, 5) The labour market conditions: Positive relationship between the labour market conditions and technical efficiency scores, 6) Years of operation: A quadratic relationship between Years of operation and technical efficiency scores, 7) FDI creates reverse effects in terms of firms’ financial performance in terms of ROA, ROE on FDI firms’ technical efficiency, 8) FDI creates reverse effects in terms of firms’ characteristics (equity to assets ratio, capital, and labour) on FDI firms’ technical efficiency. Wholly foreign-owned firms also create reverse effects in terms of equity to assets ratio on firms’ technical efficiency. Moreover, wholly foreign-owned firms also create reverse effects in terms of labour on firms’ technical efficiency. Paper also suggests some recommendations to policy makers and administrators at various levels in Vietnam.

KEYWORDS

Technological Diffusion, Technical Efficiency, FDI, Manufacturing Sector, Vietnam

Conflicts of Interest

The authors declare no conflicts of interest.

Cite this paper

Ngo-Quang, T. , Le-Van, T. and Doan-Ngoc, P. (2015) Determinants of Technological Diffusion via FDI Enterprises in the Manufacturing Sector in Vietnam over 2005-2013. Open Access Library Journal, 2, 1-12. doi: 10.4236/oalib.1102043.

References

[1]	World Bank (1993) Foreign Direct Investment-Benefits beyond Insurance. Development Brief (Vol. 14), Washington DC.

[2]	Harrison, A. (1996) Determinants and Effects of Direct Foreign Investment in Cote d’Ivoire, Morocco, and Venezuela. In: Robers, M.J. and Tybout, J.R., Eds., Industrial Revolution in Developing Countries: Micro Patterns of Turnover, Productivity and Market Structure, Oxford University Press.

[3]	Liu, Z. (2008) Foreign Direct Investment and Technology Spillovers: Theory and Evidence. Journal of Development Economics, 85, 176-193. http://dx.doi.org/10.1016/j.jdeveco.2006.07.001

[4]	Aydin, N., Sayim, M. and Yalam, A. (2007) Foreign Ownership and Firm Performance: Evidence from Turkey. International Research Journal of Finance and Economics, 11, 103-111.

[5]	Rowland, P. (2006) Foreign and Domestic Firms in Colombia: How Do They Differ? Borradores de Economia, Banco de la Republia de Colombia.

[6]	Basti, E. and Akin, A. (2008) The Comparative Productivity of the Foreign-Owned Companies in Turkey: A Malmquist Productivity Index Approach. International Research Journal of Finance and Economic, 22.

[7]	Ngo-Quang, T. (2014) Do FDI Enterprises Work More Efficiency than Domestic Ones in Vietnam? Evidence from Panel Data Analysis. Review of Management Innovation & Creativity (RMIC), 7, Issue 21.

[8]	Driffield, N. and Love, J.H. (2003) Foreign Direct Investment, Technology Sourcing and Reverse Spillovers. The Manchester School, 71, 659-672. http://dx.doi.org/10.1046/j.1467-9957.2003.00372.x

[9]	Battese, G.E. and Coelli, T.J. (1992) Frontier Production Functions, Technical Efficiency and Panel Data: With Application to Paddy Farmers in India. Journal of Productivity Analysis, 3, 153-169. http://dx.doi.org/10.1007/BF00158774

[10]	Acs, Z.J., Audretsch, D.B. and Feldman, M.B. (1994) R&D Spillovers and Recipient Firm Size. Review of Economics and Statistics, 76, 336-340. http://dx.doi.org/10.2307/2109888

[11]	OECD (1993) The Measurement of Scientific and Technological Activities: Standard Practice for Surveys of Research and Experimental Development—Frascati Manual 1993, OECD, Paris.