Location factors of export-platform foreign direct investment: Evidence from Vietnam

Thanh Tam Nguyen-Huu, Med Kechidi () and Alexandre Minda ()
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Alexandre Minda: LEREPS, Université Toulouse 1 Capitole
Authors registered in the RePEc Author Service: Alexandre Minda and Minda ()

No 13-04, Documents de recherche from Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne

Abstract: The purpose of this paper is to examine the export-platform foreign direct investment as a strategic behavior of multinational firms. First, we use a three-country model to identify the main location factors of this investment. These factors are relative labor cost between the host country and the home country and/or the third country, technological transfer cost of host country, intra-regional transport cost and the market size of third country. Particularly, this kind of investment is preferred rather than other entry modes, if and only if, the third market size is high enough. Second, the model is tested for export oriented industries in Vietnam. The integration of the Vietnamese economy into regional or international markets has a positive impact on the choice of export-platform foreign direct investment strategy. In particular, in this country, the first motivation is to access to large markets (ASEAN, U.S., European Union). Other motivations concern low cost of technological transfer and real exchange rate.

Keywords: Export-platform foreign direct investment; location factors; three-country model; multinational firm; Vietnam (search for similar items in EconPapers)
JEL-codes: F15 F16 F23 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2013-03
New Economics Papers: this item is included in nep-cse, nep-dev, nep-int and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:eve:wpaper:13-04

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