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Foreign direct investment (FDI) may benefit local firms in the host country through various kinds of spillovers, but it may also raise competition and result in the crowding out of domestic firms. Using detailed firm-level data for the period 2001-2008, this paper examines the aggregate effect of FDI on the survival of domestic private firms in Vie...
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Context 1
... Table 6, column (1) presents the estimation results in which only the presence of SOEs and control variables are included. Column (2) includes both SOEs and FDI. ...
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... control variables are robust across estimations, but are not included in Table 6 to save space (results are available on request). 2 The results in column (1) show that SOEs have a significant effect on the survival odds of DPFs. ...
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... compute the net effects of changes in FDI during the period under study, the estimated coefficients from the model must be combined with the actual changes in the various forms of FDI and SOEs included in the model. 4 Table 7 illustrates these net effects based on the coefficients in column (2) of Table 6. The effects from changes in both FDI and SOEs on the survival of DFPs are calculated. ...
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... first point to note is that the estimated net effects on changes in hazard rates are relatively small, considering the large marginal effects found in Table 6. The main reason is that the changes in FDI shares over the whole period have not been very large-both FDI and domestic industry have grown substantially, and a large share of the year-to-year fluctuations disappears when we look at the end points in the dataset. ...
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This study used a panel data set to assess the relationship between foreign direct investment (FDI) and economic growth case study in Vietnam, applying the fixed-effects estimated method to test the hypotheses related to its interaction. Our findings indicate that there is a positive bi-directional linkage between FDI and GDP per capita growth. Whe...
Citations
... Bu durumu yabancı sermaye yatırımları, örneklemdeki ülkelerde birleşme ve/veya satın almalar yoluyla stratejik iş birliklerine giderek, etkin olmayan banka şubelerinin kapatılması, müşterilerine finansal teknolojik ürünlerle (mobil bankacılık, internet bankacılığı gibi) doğrudan ulaşma yolunu tercih etmelerine bağlanabilir. Çalışmadan elde edilen bu sonuç ise Qamruzzaman (2023) ve Kokko & Thang (2014) tarafından yapılan araştırma sonuçları ile benzerlik göstermektedir. ...
Gelir düzeyi ne olursa olsun herkesin finansal hizmetlere eşit düzeyde ve uygun fiyatlarla erişiminin sağlanması anlamına gelen finansal içerme (kapsayıcılık) dünya çapında önemli bir sorundur. Özellikle gelişmekte olan ülkelerde yaşayan yaklaşık bir buçuk milyar insanın krediye erişimi bulunmamaktadır. Bu çalışma MINT (Meksika, Endonezya, Nijerya, Türkiye) ülkeleri penceresinden finansal içerme üzerinde ekonomik, politik ve finansal değişkenlerin rolünü belirlemeyi amaçlamaktadır. 2004-2021 dönemini kapsayan çalışmada öncelikle temel istatistiki testler, yatay kesit bağımlılığı, birim kök testleri ile değişkenlerin analizlere uygunluğu sınanmış sonraki aşamada momentler yöntemi panel kantil regresyonları (MM-QREG) ve eşanlı panel kantil regresyon çerçevesinde ekonometrik analizler yapılmıştır. Yapılan analizler sonucunda finansal içerme üzerinde özellikle politik istikrar ve kişi başına düşen milli gelirin rollerine dair güçlü parametrik olmayan kanıtlara ulaşılmıştır. Buna göre politik istikrar ve kişi başına düşen milli gelir değişkenleri tüm kantil seviyelerinde anlamlı ve pozitif etkilere sahiptir. Buna karşın doğrudan yabancı yatırımların finansal içerme üzerindeki etkisi sınırlı kantil düzeylerinde anlamlı olup, negatif yönlüdür.
... А. Структура товарных рынков и параметры конкуренции. В условиях более совершенной структуры товарных рынков, низких барьеров и развитой конкуренции неэффективные фирмы быстро вытесняются с рынка (Geroski et al., 2010;Kokko and Tran, 2014), что сказывается на показателях ликвидации фирм, в первую очередь молодых (Brixy and Grotz, 2007). Вместе с тем высококонцентрированные рынки, где у лидеров значительна рыночная власть, являются комфортной средой для функционирования и неэффективных фирм (Geroski et al., 2010). ...
... Вместе с тем высококонцентрированные рынки, где у лидеров значительна рыночная власть, являются комфортной средой для функционирования и неэффективных фирм (Geroski et al., 2010). В научной литературе, связанной с анализом механизмов выживания, для оценки интенсивности конкуренции используется широкий спектр показателей: уровень концентрации (Kokko and Tran, 2014;Zajc Kejžar and Ponikvar, 2014), количество действующих компаний (Burke et al., 2008;Fritsch et al., 2010), валовой вход (абсолютные значения регистрации) новых фирм (Ahn, 2001;Falck, 2007;Jensen et al., 2008), число новых фирм, регистрируемых в соседних регионах (Mata and Portugal, 1994), значения коэффициента рождаемости фирм (Buddelmeyer et al., 2010;Huynh et al., 2012), а также коэффициента чистого входа (Zajc Kejžar and Ponikvar, 2014). ...
... Так, исследователи отмечают, что отрасли с более высокими показателями входа, как правило, характеризуются и более высокими рисками для молодых фирм (Ahn, 2001;Huynh et al., 2012;Lopez-Garcia and Puente, 2006;Mata and Portugal, 1994), низкой вероятностью долгосрочного выживания (Geroski et al., 2010;Kokko and Tran, 2014). В то же время в регионах с высоким уровнем валового входа могут быть комфортные условия для предпринимательства, формирую-18 В силу мультиколлинеарности ряд потенциально интересных для исследования факторов не рассматривался и в регрессию не включался. ...
... As a result, local firms may find it more difficult to finance their business. 23 Kokko and Thang (2014) find evidence of crowding-out while documenting the impact of FDI on the survival of domestic private firms in Vietnam. 23 Harrison and McMillan (2003) in a study centered on Ivory Coast, a country with market imperfections, find that local firms are more credit-constrained than foreign firms and that borrowing by foreign firms exacerbates the credit constraints of domestic firms These two factors, higher barriers to entry requiring more funding and rationed access to credit, which reduces funding, jointly have the potential to crowd local firms out of the market in which they operate after the entry of larger multinational enterprises. ...
The theoretical literature on the FDI-growth relationship suggests that FDI with high technological content might play a peculiar role. To investigate the existence and magnitude of this peculiar effect, we collected data for 28 countries over the period 1989 to 2019 and used GMM techniques for empirical estimation. We employed the U.N. International Standard Classification (ISIC) Revision 3 to classify FDI data and follow the criteria laid down by the Organization for Economic Cooperation and Development (OECD) to distinguish FDI data by technological content. The empirical findings of this article confirm that technology plays an important role in determining the FDI-Growth relationship. Interestingly, the empirical evidence supports a U-shaped relationship between FDI and economic growth when FDI is disaggregated by different technological contents. More specifically, we find strong evidence that in the manufacturing sector, FDI with a higher technological content exhibits a positive association with growth in the host country. We also find evidence pointing towards a positive relationship between FDI and growth in the host country at the other end of the technology spectrum (low-tech). Further investigation confirms the robustness of these findings across different estimation techniques as well as across different sampling strategies.
... O presente estudo tem por escopo pequenas empresas do Vietnã, uma vez que PMEs dominam o mercado do país (Koushan, 2017 (Kikuchi, Yanagida, & Vo, 2018;Kokko & Thang, 2014) -levando a dramáticas transformações na economia. Uma óbvia consequência é a maior participação de joint ventures e empresas estrangeiras, que contam com mais recursos, ARTIGOS | Eficácia dos ajustes estratégicos em um mercado competitivo: foco em pequenas empresas em um país emergente ...
... A intensidade da concorrência de mercado refere-se à pressão enfrentada pelas empresas que competem em um mercado (Grewal & Tansuhaj, 2001). No Vietnã, essa concorrência é intensa devido ao aumento significativo do investimento estrangeiro direto e à participação do país em diversos acordos de livre comércio (Kikuchi et al., 2018;Kokko & Thang, 2014;Le, Pieri, & Zaninotto, 2019). Quando a concorrência é intensa, a empresa pode exercer um comportamento agressivo para obter vantagem em itens como preço, promoção, integração vertical, pesquisa e desenvolvimento e inovação tecnológica (Khandwalla, 1981). ...
This study analyzes how small businesses in an emerging country improve performance through strategic fit according to the intensity of market competition. It explores small businesses’ prospector or defender strategies in an environment of intense market competition. Data were collected from 107 small businesses in Vietnam, and PLS-SEM was used to assess the research model. The results showed that only prospector businesses improve performance in intense market competition. This study contributes to the literature fourfold. First, it extends the current knowledge of strategic fit by addressing the mediating effects of strategic behavior. Second, it contributes to the growing literature on contingency theory in small businesses’ strategic management. Third, this research offers a deeper understanding of the unique characteristics of emerging countries that jeopardize the effectiveness of using a defender strategy. Fourth, this study overcomes limitations observed in the literature regarding using single-item constructs to operationalize strategy variables.
Keywords:
Defender strategy; market competition; prospector strategy; small business; Vietnam
... By 2021, this sector contributed over 40% of GDP, 30% of the state budget, and attracted about 85% of Vietnam's labor force. 1 However, the development quality of this sector still has some limitations. Many private enterprises in developing countries face common difficulties such as accessibility to technology, poor management, slow productivity growth, and low conversion rate (Kokko & Thang, 2014). The productivity growth rate of the private sector is still low, only equal to 34% of the labor productivity of the state-owned enterprises, and about 69% of the labor productivity of the foreign-invested sector. 2 ...
The study evaluates the influence of cash flow on the financial distress of private listed enterprises on the Vietnamese stock market from 2010 to 2020. We use the data collected from the financial statements of 263 private non-financial enterprises listed on the Ho Chi Minh and Hanoi stock exchanges from 2010 to 2020 in the FinPro database. The quantile regression method was employed to analyze the effect of cash flow on the financial distress of listed non-financial private enterprises. The results show that the cash flow from operating activities and the cash flow from financial activities have negative relationships with financial distress. However, the cash flow from investing activities has a positive relationship. Based on experimental results, the study proposes some recommendations on cash flow forecasting, building an optimal budget model to help business managers have appropriate cash flow management policies to reduce the risk of financial distress.
... Some early studies have focused on FDI crowding effects in Vietnam, mostly at firm level. Using the Cox hazard model, Kokko and Thang (2014) provide a general picture of how FDI affected local firm survival in Vietnam between 2001 and 2008. The results show a positive effect from downstream FDI on the survival of local enterprises, whereas upstream FDI is found to reduce the lifespan of domestic private enterprises. ...
... Nevertheless, our finding contrasts with a range of other studies of developing countries (Agosin and Machado, 2005;Ahmed et al., 2015;Chen et al., 2017;Morrissey and Udomkerdmongkol, 2012) and developed countries (Kosova, 2010;Mi sun and Tom sík, 2002;Pilbeam and Oboleviciute, 2012) that find strong evidence of a crowding-out effect. Our findings are consistent with Pham (2016), who finds a crowding-in effect at firm level but differ to some extent from results in the Vietnamese literature, such as the study conducted by Kokko and Thang (2014), which reports that foreign firms seem to lessen the probability that domestic private enterprises will have a long lifespan. ...
This paper examines the linkages between foreign and domestic investment at sector level in a transitional economy. Using System Generalized Method of Moments estimation on a strong balanced dataset covering all sectors across the country, our results consistently suggest that foreign direct investment in Vietnam positively motivates domestic private investment in the same sector. Examination of the linkages finds evidence of crowding-in effects from foreign investment on domestic private investment in downstream sectors that have strong linkages with foreign investment in upstream sectors. No significant impact is found in upstream domestic investment that has linkages with foreign investment in downstream sectors. State-owned investment and joint-venture investment by foreign and domestic investors have a generally negative effect on the investment behavior of private investors. Domestic private investment in export-oriented sectors appears to be more responsive to the presence of foreign investment in both upstream and downstream sectors through vertical linkages.
... With Viet Nam and other emerging countries, these factors may be especially significant (Shieh and Wu, 2012;Tsang, 2005;Vu, Yamada, and Otsuki, 2017). For FDI firms, an entry mode choice into Viet Nam, as well as into other emerging countries, could be made difficult by the high levels of external uncertainty and internal constraints in those countries (Kokko and Thang, 2014;Lin, 2000). Despite the rapid growth of FDI inflow in Viet Nam, the census data show a high rate of multinational enterprises (MNEs) exiting the Vietnamese market, a finding consistent with that of Ha and Kiyota (2014), who found a high turnover (approximately 35% for both entry and exit rates in 2008) of manufacturing firms in the country, including domestic firms. ...
Does the right entry mode choice help foreign direct investment (FDI) firms to perform efficiently in emerging economies? This study attempts to answer this question by examining the impact of the entry mode choice made by FDI firms on their post-entry performance in emerging markets. Using a dataset derived from specific firms for the period 2002-2016, this study accounts for the selection biases and inherent differences of FDI firms that affect their selection of entry strategies. The study found that, with regard to the manufacturing sector, the ownership type with a wholly owned subsidiary (WOS) had negative impacts on either the technical efficiency or the total factor productivity (TFP) of firms. Conversely, regarding all sectors in the economy, the WOS is likely to have a positive role on technical efficiency and TFP. It is also interesting to see that for firms with an equity joint venture (EJV) type, the higher proportion of capital contribution from domestic firms might lead to lower technical efficiency and TFP. It implies that the higher degree of management and control by the domestic firms compared with foreign firms would have negative impacts on the EJV firms' performance.
... In this context, the government may give SOEs significant incentives, such as privileged access to essential infrastructure that will facilitate government-initiated innovation (Chang et al., 2006). Meanwhile, our result supports the finding from Kokko and Thang (2014) that in developing countries credit-constrained domestic private firms face limited access to technology. ...
Purpose
This policy paper compares the performance of state-owned enterprise (SOEs) versus private firms in selected emerging economies in Asia, focusing on a number of performance indicators. The indicators are internationally recognized quality innovation, product and/or service innovation, financing of operations, dealing with government regulations and labor performance. To the best of the authors’ knowledge, there has been no such comparative study for these indicators between SOEs and private firms and across countries. Most studies of SOEs have been national case studies. As such, they give us little knowledge of how a country compares with other countries at similar stages of economic development. A cross-country comparative analysis can help us identify broader trends and patterns.
Design/methodology/approach
The authors compare and discuss the performance of SOEs versus private firms in a number of emerging Asian countries, namely China, India, Indonesia, Malaysia and Vietnam. To do so, the authors use data from the 2018 World Bank Enterprise Survey (which is the latest available) for the period 2012–2015. The authors focus on a number of key performance indicators, namely internationally recognized quality innovation, product and/or service innovation, financing of operations, dealing with government regulations and labor performance.
Findings
The comparative analysis uncovers some interesting differences between the two types of firms. For example, somewhat surprisingly, SOEs tend to innovate more than private firms. However, the single most significant pattern the authors find is that in middle-income Asia both types of firms face formidable challenges with respect to doing business – e.g. scarcity of relevant training programs for employees. Therefore, the priority of policymakers must be to improve the overall business environment for all firms, regardless of their ownership structure.
Research limitations/implications
The nature of this paper is a policy paper. This is because the data used in this study is survey data, conducted every four–five years (or more) for each country in the study and available for very few countries. As the data are not available for a continuous period of time, The authors could not conduct empirical research for this topic and thus made it a policy paper that presents a comparison across Asian countries as case studies.
Originality/value
The five selected Asian countries are interesting case studies for a comparative analysis since they are middle-income countries where SOEs play a significant role in the economy. Furthermore, state ownership is an important institutional dimension in emerging markets, and strong ties with the government can influence the performance of SOEs through various market and non-market channels. Despite the potential importance of the research theme, there is very little existing research on cross-country comparisons of the performance of SOEs vis-à-vis private firms. This could be explained by scarce data availability. With this in mind, the study attempts to shed some light on SOEs' performance and add to the rather limited literature.
... With respect to identifying vertical FDI spillovers, it is challenging to provide an equally clear-cut conclusion, for vertical spillovers are unobservable through the direct competition effect (Kokko & Thang, 2014). This study, however, finds a positive relationship between the coefficients of vertical spillovers and access to finance. ...
Financial constraints have been a significant obstacle to firms operating in developing countries. Prior studies show that foreign direct investment (FDI) helps to ease credit constraints for domestic firms. However, they only account for horizontal FDI spillovers. This paper therefore investigates both horizontal and vertical FDI spillovers using firm-level data from Cambodia, Lao PDR, and Myanmar (CLM). The key findings of this paper are threefold. First, FDI inflows lessen the financial constraints faced by local firms through partnership or joint venture. Second, an increasing share of FDI in horizontally and vertically related industries raises higher credit constraints for domestic firms. Third, the crowding-out effect of FDI is not uniform across domestic firms of different sizes. Therefore, policymakers should be aware of these possible negative spillovers and formulate policy to maintain FDI inflows while also ensuring the growth and survival of domestic firms.
... Another channel for positive externalities from FDI is through "crowding in" of new private investment. 8 An investment by a multinational creates demand for a variety of goods and services inputs, leading to the expansion of domestic firms or new entrants in upstream sectors (Al-Sadig, 2013;Kokko & Thang, 2014;Ndikumana & Verick, 2008;Tang et al., 2008). At the same time, the availability of lower-cost or higher-quality products from foreign investment can spur new business activities in the domestic economy that were previously not viable (Fernandes & Paunov, 2012). ...
During the 1990s, many developing countries underwent simultaneous processes of global economic integration and decentralization. As a result, subnational governments became increasingly important actors in the international economy, including through policies to secure investments from multinational corporations (MNCs). These efforts have the potential to affect the management of public resources at the subnational level. Breaking from the literature's focus on fiscal incentives, we highlight how “active” foreign investment incentives—including commitments to build new infrastructure and develop worker training programs—have shaped subnational public finances in Mexico. We demonstrate that FDI attraction affected how subnational governments exercised their growing policy authority and fiscal resources. Based on panel data from Mexican states between 1998 and 2017, we find that FDI shocks are associated with statistically and economically significant increases in public investment by state governments, and decreases in public sector consumption of goods and non-personnel services. A case study of a representative investment project in Puebla highlights the importance of active investment incentives as a causal mechanism linking FDI attraction and subnational spending outcomes. Our results illustrate how FDI attraction can affect the distribution of subnational public spending and also develop a theoretically-relevant distinction between passive and active investment incentives.
