FDI’s Crowding out Effect on the Exit of Domestic Firms in the Textile and Garment Industry
Main Article Content
Abstract
For the Vietnamese economy in general and the textile and garment industry in particular, FDI is a external resource that brings many positive effects. However, the presence of FDI enterprises can cause the negative impact of creating crowding out effect on domestic firms. This study is conducted to answer the question of whether the presence of FDI enterprises affect the survival of domestic firms or not? The authors apply the logistic regression model to analyze the crowding out effect of FDI on the exit of domestic firms, using the case of the textile and garment processing industry which has a key role in Vietnam manufacturing industry and also attracted a large amount of FDI in recent years, to find evidence for this impact. Thereby, the research team will gives some policy implications to minimize the negative impact (if any) of FDI on domestic firms.
Keywords:
Foreign Direct Investment, crowding out effect, textile and garment industry
References
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[2] General Statistics Office of Vietnam, Enterprise Survey Data for the period 2009-2015 (2010-2016).
[3] N.T.T. Anh, V.X.N. Hong, T.T. Thang, N.M. Hai, “The impact of foreign direct investment on Vietnam's economic growth: CIEM and SIDA”, http://www.ciem.org.vn/Portals/0/CIEM/BaoCaoKhoaHoc/2005/RRFDITang_truongKTvietnamese_233.pdf, 2006 (accessed 15 September 2020) (in Vietnamese).
[4] P.Q. Sang, P.T.B. Ngoc, P.D. Long, “The crowding out effect of FDI on the exit of domestic enterprises”, Journal of Science and Technology 17(4) (2014) 57-68 (in Vietnamese).
[5] H. Görg, D. Greenaway, “Much ado about nothing? Do domestic firms really benefit from foreign direct investment?”, The World Bank Research Observer 19(2) (2004) 171-197.
[6] M. Blomström, A. Kokko, “Multinational corporations and spillovers”, Journal of Economic Surveys 12(3) (1998) 247-277.
[7] C. Franco, J.P. Weche Gelübcke, “The Death of G erman Firms: What Role for Foreign Direct Investment?”, The World Economy 38(4) (2015a) 677-703.
[8] N.J. Freeman, “Foreign direct investment in Vietnam: An overview”, DFIP Workshop on Globalisation and Poverty in Vietnam, Hanoi, 2002.
[9] T.P.H. Nguyen, Foreign direct investment and its contributions to economic growth and poverty reduction in Vietnam (1986-2001), Peter Lang Pub Inc., 2004.
[10] D.N. Phuc, “Foreign Direct Investment in Vietnam - Current Situation, Issues and Prospects”, Journal of Economic Research, 315 (2004) (in Vietnamese).
[11] H.T.M. Pham, “Foreign direct investment, productivity and crowding-out: Dynamic panel evidence on Vietnamese firms”, Paper presented at the Proceedings of Economics and Finance Conferences International Institute of Social and Economic Sciences, 2016.
[12] N. Kumar, J.P. Pradhan, “Foreign Direct Investment, Externalties and Economic Growth in Developing Countries: Some Empirical Explorations and Implications for WTO Negotiations on Investment”, Research and Information System for the Non-aligned and Other Developing Countries, 2002.
[13] R. Alvarez, H. Görg, “Multinationals and plant exit: Evidence from Chile”, International Review of Economics & Finance. 18(1) (2009) 45-51.
[14] A. Ferragina, R. Pittiglio, F. Reganati, The impact of FDI on firm survival in Italy: FIW Working Paper, 2009.
[15] R. Bandick, “Multinationals and plant survival”, Review of World Economics 146(4) (2010) 609-634.
[16] D. Fackler, C. Schnabel, J. Wagner, “Establishment exits in Germany: The role of size and age”, Small Business Economics 41(3) (2013) 683-700.
[17] D.B. Audretsch, T. Mahmood, “New firm survival: New results using a hazard function”, The Review of Economics and Statistics 71(1) (1995) 97-103.
[18] J. Mata, P. Portugal, “Life duration of new firms”, The Journal of Industrial Economics 42(3) (1994) 227-245.
[19] J. Wagner, “Exports, imports and firm survival: First evidence for manufacturing enterprises in Germany”, Review of World Economics 149(1) (2013) 113-130.
[20] S.B. Javorcik, “Does foreign direct investment increase the productivity of domestic firms? In search of spillovers through backward linkages”, American Economic Review 94(3) (2004) 605-627.
[21] H. Görg, E. Strobl, “Multinational companies, technology spillovers and plant survival”, Scandinavian Journal of Economics 105(4) (2003) 581-595.