Foreign direct investment and it's impact on domestic - Entrepreneurship in Vietnam
Abstract
Using data set of 710,633 firms across 88 industries collected by GSO in Vietnamese market during 2007-2015, the study investigates the influence of foreign presence on the construction and destruction of domestic firms in Vietnam. There is empirical proof for favorable impact of the previous flow of foreign direct investment on the choice of indigenous entities to enter or leave the market. The research reveals the upstream spillovers positively stimulates the formation and demolition of native entrepreneurs, while the lagged backward linkages impact negatively on the crowding in effect. We concurrently find that specific industrial characteristics naming profitability, import competition, domestic industrial growth, and physical capital intensity have negative relationships with domestic entry rate. Inverse impact of industrial scale on crowding in effect demonstrates the distinctive attributions of emerging market having low labor cost.
Keywords: FDI spillovers, Crowding in effect, Crowding out effect, Emerging market