The Rise of Viet Nam’s Solar Panel Industry: Inputs, FDI, and Spillovers

Meng Yu Ngov, Pierre-Louis Vézina, Trang Thu Tran and Gaurav Nayyar

No 11478, Policy Research Working Paper Series from The World Bank

Abstract: This paper documents how foreign firms, inputs, and subsidies have shaped the development of Viet Nam’s solar panel industry. The analysis uses firmto-firm transaction data from Panjiva as well as firm-level data from the Viet Nam’s Enterprise Survey to trace solar panel value chains. It uncovers three key findings. First, parts and components from subsidizing countries are 30 percent cheaper than alternatives. Those from China, which provides the majority of solar inputs to Vietnamese producers, are cheapest. Foreign green subsidies may thus spill over across countries via value chains. Second, Chinese FDI firms dominate Viet Nam’s solar industry, accounting for 75% of exports and 50 percent of jobs, and they export solar panels that are 38 percent cheaper than those of other producers in Viet Nam. Third, local firms supplying parts and components to these Chinese FDI firms experience positive productivity gains. The findings show how Viet Nam’s solar boom emerged through deep integration into China’s subsidized supply chains.

Date: 2026-10-02
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