Luận văn thạc sĩ UEH horizontal technology spillover effects from foreign dirrect investment on

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UNIVERSITY OF ECONOMICS

HO CHI MINH CITY

VIETNAM

INSTITUTE OF SOCIAL STUDIES

THE HAGUE

THE NETHERLANDS

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VIETNAM-NETHERLANDS

PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

HORIZONTAL TECHNOLOGY SPILLOVER

EFFECTS FROM FOREIGN DIRECT

INVESMENT ON LABOUR PRODUCTIVTY IN

MANUFACTURING INDUSTRY IN VIETNAM

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF

MASTER OF ART IN DEVELOPMENT ECONOMICS

BY

THAN HOANG DUNG

ACADEMIC SUPERVISOR: DR. LE THI THANH LOAN

Ho Chi Minh, November 2011

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CERTIFICATION

I hereby certify that the substance of this thesis has not been submitted for any

degrees and is not being currently submitted for any other degrees.

I also certify that, to the best of my knowledge, and any help received in preparing

the thesis and all sources used have been acknowledged in the thesis.

Signature

Than Hoang Dung

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ACKNOWLEDGEMENT

I have been receiving a great support from many people to complete this research. I

am greatly grateful to the valuable guidance, encouragement and advice from numerous

individuals including Vietnam-Netherlands program lecturers, friends and my family

members.

I would like to express my sincere appreciation to my supervisor, Dr. Le Thi Thanh

Loan, for her continuous support, for her valuable instructions, advices, comments and

immense knowledge during the completion of my thesis.

I am truly grateful to Professor Peter Calkins for his precious advices and

comments for improving the quality of the thesis, for his lectures in research and

methodology.

My sincere thanks also go to Associate Professor Nguyen Trong Hoai for his

lectures in econometrics, Mr Phung Thanh Binh and Mr Le Van Chon, the lectures of

Vietnam- Netherlands project, for his kind help and instructions in data analysis by Eviews

and Stata software.

Finally, I would like to send my special thanks to my friends in MDE class 14, 15

and the rest of my thesis committee for their supportive friendship, encouragement and

insightful comments.

My special gratefulness is to my family for their love, affection and for supporting

me spiritually in my learning and my career.

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TABLE OF CONTENTS

1. CHAPTER 1: INTRODUCTION ............................................................................... 8

1.1. Problem Statement .............................................................................................. 8

1.2. Research Objectives ............................................................................................ 9

1.3. Research Questions ........................................................................................... 10

1.4. Research scope .................................................................................................. 10

1.5. Organization of the Research ............................................................................. 11

2. CHAPTER 2: LITERATURE REVIEW .................................................................. 12

2.1. Literature Review- The Concepts ..................................................................... 12

2.1.1. Foreign Direct Investment (FDI) ................................................................ 12

2.1.2. Productivity and Labour Productivity ......................................................... 13

2.1.3. Spillovers Effects ....................................................................................... 13

2.2. The Economics Theory ...................................................................................... 15

2.2.1. Neoclassical Theory ................................................................................... 15

2.2.2. Endogenous Theory ................................................................................... 17

2.3. The Empirical Study .......................................................................................... 18

2.4. Analysis Framework ......................................................................................... 23

3. CHAPTER 3: RESEARCH METHODOLOGY ....................................................... 25

3 .1. Data Collection ................................................................................................. 25

3.2. Description ofVariables .................................................................................... 26

3.2.1. Dependent variable: Labour productivity (LABPRO) ................................. 26

3.2.2. Explanatory variables ................................................................................. 26

3.3. Model Specification .......................................................................................... 28

3.4. Estimation Strategy ........................................................................................... 29

3.5. Hypothesis statements ....................................................................................... 30

4. CHAPTER 4: MODEL RESULTS AND DISCUSSION ......................................... 32

4.1. Descriptive statistics .......................................................................................... 32

4.2. Estimation results .............................................................................................. 34

4.2.1. Pool regression model results ..................................................................... 34

4.2.2. Random effects model results ..................................................................... 34

4.2.3. Fixed effects model results ......................................................................... 35

j 4.3. Results discussion ............................................................................................. 39

4.3.1. The significant effect ofFDI spillovers in Food processing industry ........... 39

4.3.2. The influence ofFDI spillovers in Electronics and Mechanics industry ...... 40

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4.3.3. The effect of controllable variables on labour productivity ......................... 40

5. CHAPTER 5: CONCLUSION AND IMPLICATIONS ........................................... 42

5.1. Conclusion ........................................................................................................ 42

5.2. Implication ........................................................................................................ 42

5.3. Research limitation ............................................................................................ 44

6. REFERENCES ........................................................................................................ 45

7. APPENDICES ......................................................................................................... 51

7.1. APPENDIX A. MODEL RESULTS IN FOOD PROCESSING ......................... 51

7.2. APPENDIX B. MODEL RESULTS IN ELECTRONICS AND MECHANICS. 56

7.3. APPENDIX C. OVERVIEW OF FDI IN VIETNAM ........................................ 60

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LIST OF TABLES

Table 1: The expected signs ofindependent variables ............................................................... 31

Table 2. The descriptive statistics of data sample in Food Processing industry .......................... 32

Table 3. The correlation coefficients of the variables in Food Processing industry .................... 33

Table 4. Pool regression model result in Food Processing industry ........................................... 34

Table 5. Random effects model result in Food Processing industry ........................................... 34

Table 6. Breusch-Pagan Lagrange multiplier test.. .................................................................... 35

Table 7. Fixed effects model result in Food Processing industry ............................................... 36

Table 8. Hausman test .............................................................................................................. 36

Table 9. Fixed effects model result with time fixed effects in Food Processing industry ........... 37

Table 10. Time-fixed effects test .............................................................................................. 37

Table 11. Modified Wald test ................................................................................................... 3 7

Table 12. The result of the most appropriate model in Food Processing industry ...................... 38

Table 13. The summary ofresu1ts in the most appropriate model in Food Processing and

Electronics and Mechanics ....................................................................................................... 39

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