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Foreign direct investment in provinces: A spatial regression approach to FDI in Vietnam

Foreign direct investment in provinces: A spatial regression approach to FDI in Vietnam

Esiyok, Bulent and Ugur, Mehmet ORCID: 0000-0003-3891-3641 (2011) Foreign direct investment in provinces: A spatial regression approach to FDI in Vietnam. [Working Paper]

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Abstract

Foreign direct investment (FDI) flows into Vietnam have increased significantly in recent years, with unequal distribution between provinces and regions. We aim to contribute to the literature on locational determinants of FDI by accounting for spatial interdependence between 62 Vietnamese provinces from 2006-2009. For this purpose, we estimate a spatial lag model using maximum likelihood estimation method. We report existence of spatial dependence between provinces as well as spatial spill-over effects. The results are robust to different specifications for weight matrices and inclusion of different explanatory variables and/or proxies. We also report that conventional determinants of FDI such as market size, domestic investment, openness to trade, labour cost, education and governance, etc. are significant and remain robust to inclusion of spatial interdependence. The sign of the spatial dependence suggests that the distribution of FDI between provinces is subject to conglomeration effects.

Item Type: Working Paper
Uncontrolled Keywords: foreign direct investment, spatial dependence, conglomeration, Vietnam
Subjects: H Social Sciences > HB Economic Theory
Faculty / Department / Research Group: Faculty of Business > Greenwich Political Economy Research Centre (GPERC)
Faculty of Business > Department of International Business & Economics
Related URLs:
Last Modified: 02 Nov 2016 13:52
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
URI: http://gala.gre.ac.uk/id/eprint/7893

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