Does Foreign Direct Investment Have an Impact on the Growth in Labor Productivity of Vietnamese Domestic Firms?

Foreign direct investment has been considered a very important factor in the recent growth of Vietnam's economy and thus far has drawn a great deal of concern from economic researchers in Vietnam. However, studies on the impacts of foreign direct investment on Vietnam's economy, especially the technological spillovers, are still very scarce compared with other developing countries. This study makes an attempt to determine the main channels and estimate the degree of spillover effects in Vietnam using industry level data for the 1995-1999 and 2000-2002 periods. The linkage between foreign investors and domestic private sectors is found to play an important role for technological spillovers from foreign direct investment in Vietnam.