Does foreign investment crowd in domestic investment? Evidence from Vietnam

Van Ha, Mark Holmes () and Tuyen Tran

International Economics, 2022, vol. 171, issue C, 18-29

Abstract: This paper examines the linkages between foreign and domestic investment at sector level in a transitional economy. Using System Generalized Method of Moments estimation on a strong balanced dataset covering all sectors across the country, our results consistently suggest that foreign direct investment in Vietnam positively motivates domestic private investment in the same sector. Examination of the linkages finds evidence of crowding-in effects from foreign investment on domestic private investment in downstream sectors that have strong linkages with foreign investment in upstream sectors. No significant impact is found in upstream domestic investment that has linkages with foreign investment in downstream sectors. State-owned investment and joint-venture investment by foreign and domestic investors have a generally negative effect on the investment behavior of private investors. Domestic private investment in export-oriented sectors appears to be more responsive to the presence of foreign investment in both upstream and downstream sectors through vertical linkages.

Keywords: Foreign direct investment; Domestic private investment; Crowding effects; Generalized method of moments estimation (search for similar items in EconPapers)
JEL-codes: D22 F21 F23 O12 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S2110701722000385
Full text for ScienceDirect subscribers only

Related works:
Journal Article: Does foreign investment crowd in domestic investment? Evidence from Vietnam (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:inteco:v:171:y:2022:i:c:p:18-29

DOI: 10.1016/j.inteco.2022.05.003

Access Statistics for this article

International Economics is currently edited by Valerie Mignon and Marcelo Olarreaga

More articles in International Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().