Export spillovers from FDI in manufacturing industry in Viet Nam

Viet Nam has reached more than 20 years since the first FDI project. This study aims to examine export spillovers from FDI in the manufacturing industry and measure the effects of country characteristics and linkages between FDI enterprises and domestic firms on the export performance of the industry in Viet Nam. We use panel data from 4203 manufacturing export firms from 63 provinces, collected from the General Statistics Office of Viet Nam from 2010 to 2016. We employ the Generalized Method of Moment (GMM) to solve the endogenous problem. The empirical findings show that FDI complements exports, and the complementary effect is contingent upon the technology levels of sectors in manufacturing industries. FDI is most effective for promoting exports in high- and medium-high technology level industries, while is least effective in low and medium-low technology level industries. In addition, the findings show that better characteristics of the host country, such as human capital, the business environment, and financial market, contribute to stronger export spillovers from FDI in the industries. Accordingly, the study advocates for well-designed policies that prioritize strengthening linkages between FDI enterprises and domestic firms, channelling FDI to strategic sectors, and improving the quality of human capital, financial markets, and the business environment.