FDI spill-overs, absorptive capacity and domestic firms' technical efficiency in Vietnamese wearing apparel industry

Abstract

This study empirically examines relationship between FDI spill-overs and technical efficiency of domestic firms and role of the absorptive capacity of domestic firms. Data on Vietnamese Annual Enterprises Survey are exploited to build a firm-level panel data on the Vietnamese wearing apparel industry from 2009 to 2013. By applying stochastic production frontier model, this paper shows that there are positive vertical spill-over effects but no horizontal effects. Moreover, this study finds the negative impact of the absorptive capacity of domestic firms on benefits reaped from FDI externalities.