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

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

No 25138, RFBerlin Discussion Paper Series from ROCKWOOL Foundation Berlin (RFBerlin)

Abstract: We document how foreign firms, inputs, and subsidies have shaped the development of Viet Nam's solar panel industry. We use firm-to-firm transaction data from Panjiva as well as firm-level data from the Vietnamese Enterprise Survey to trace solar panel value chains. We uncover three key findings: First, parts and components from subsidizing countries are 30% cheaper than alternatives. Those from China, which provides the majority of solar inputs to Vietnamese producers, are cheapest. Foreign 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% of jobs, while exporting solar panels that are 38% 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. Our findings show how Viet Nam's solar boom emerged through deep integration into China's subsidized supply chains.

Keywords: global value chains; green subsidies; FDI (search for similar items in EconPapers)
JEL-codes: F14 F23 Q42 (search for similar items in EconPapers)
Date: 2025-12
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