Localizing foreign firms in Vietnam through analyzing effects of agglomeration economies
Main Article Content
Abstract
This paper studies the effects of agglomeration economies on the location choices by foreign firms in Vietnam. By using a large dataset that provides detailed information about individual firms, the study examines the location choices by 737 newly created foreign firms in 2007 in about 125 different 4-digit industries. The estimates of the conditional logit model show that agglomeration benefits motivate newly-created foreign firms to locate near other foreign firms. Moreover, the results show that foreign firms in the same industries and from the same countries of origin to locate near each other.
Article Details
Keywords
Agglomeration, Location choice, Foreign direct investment
References
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2. Baum, J. and Haveman, H. (1997), “Love thy neighbor? Differentiation and agglomeration in the Manhattan hotel industry, 1898-1990”, Administrative Science Quarterly, vol. 42, pp.304-338.
3. Boudier-Bensebaa, F. (2005), “Agglomeration economies and location choice, foreign direct investment in Hungary”, Economics of Transition, vol.13, no.4, pp. 605-628.
4. Cheng, L. and Kwan, Y. (2000), “What are the determinants of the location of foreign direct investment? The Chinese experience”, Journal of International Economics, vol.51, pp.379-400.
5. Coughlin, C. and Segev, E. (2000), “Location determinants of new foreign-owned manufacturing plants”, Journal of Regional Science, vol.40, pp.323-351.
6. Crozet, M., Mayer, T. and Mucchielli, J. (2004), “How do firms agglomerate? A study of FDI in France”, Regional Science and Urban Economics, vol.34, pp.27-54.
7. David, P. and Rosenbloom, J. (1990), “Marshalian factor market externalities and the dynamics of industrial location”, Journal of Urban Economics, vol.28, pp.349-370.
8. Dunning, J.H. (1993), “Multinational enterprises and the global economy”, New York: Addison-Wesley.
9. Glaeser, E., Kalla, H., Scheinkman, J., and Schleifer, A. (1992), “Growth in cities”, Journal of Political Economy, vol. 100, no.6.
10. General Statistics Office (2004), “The situation of enterprises through the results of surveys conducted in 2001, 2002, 2003”, Hanoi: Statistical Publishing House.
11. General Statistics Office (2007), “The situation of enterprises through the results of surveys conducted in 2004, 2005, 2006”, Hanoi: Statistical Publishing House.
12. General Statistics Office (2010), “The situation of enterprises through the results of surveys conducted in 2007, 2008, 2009”, Hanoi: Statistical Publishing House.
13. General Statistics Office (2000-2010), “Vietnam Statistical Yearbook”, CD-rom, Hanoi: Statistical Publishing House.
14. General Statistics Office website: http://www.gso.gov.vn/default.aspx?tabid=217.
15. Guimaraes, P., Figueiredo, O. and Woodward, D. (2000), “Agglomeration and the location of foreign direct investment in Portugal”, Journal of Urban Economics, vol. 47, pp.115-135.
16. Head, K., Ries, J. and Swenson, D. (1995), “Agglomeration benefits and location choice:
evidence from Japanese manufacturing investments in the United States”, Journal of International Economics, vol.38, pp.223-247.
17. Head, K., Ries, J. (1996), “Inter-city competition for foreign investment: static and dynamic effects of China’d incentive areas”, Journal of Urban Economics, vol.40, pp.38-60.
18. Head, K., Ries, J. and Swenson, D. (1999), “Attracting foreign manufacturing: investment promotion and agglomeration”, Regional Science and Urban Economics, vol.29, pp.197218.
19. Krugman, P. (1991), “Geography and Trade”, Leuven: Leuven University Press and Cambridge (MA), London: the MIT Press.
20. Krugman, P. R. and Maurice, O. (1997), “International Economics”, New York: AddisonWesley.
21. Long, J.S. (1997), “Regression models for categorical and limited dependent”, Thousand Oaks, CA: Sage Press Publication.
22. Long, J.S. and Freese, J. (2006), “Regression models for categorical dependent variables using Stata”, Texas: Stata Press Publication.
23. Marshall, A. (1920), “Principles of Economics”, London: Macmillan.
24. McFadden, D. (1974), “Conditional logit analysis of qualitative choice behavior”, in Zarembka P. (eds): Frontiers in Econometrics, New York: Academic Press.
25. Meyer, K. E. and Nguyen, H. V. (2005), “Foreign investment strategies and sub-national institutions in emerging markets: evidence from Vietnam”, Journal of Management Studies, vol. 42, no.1.
26. Mirza, H. and Giroud, A. (2004), “Regional integration and benefits from foreign direct investment in ASEAN countries: the case of Vietnam”, Asian Development Economic Review, vol. 21, no.1, pp.31-40.
27. MPI website: http://www.mpi.gov.vn/portal/page/portal/bkhdt/dtttnn(fdi).
28. Saxenian, A. (1994), “Regional Advantage”, Cambridge (MA): Harvard University Press.
29. Shaver, J.M. and Flyer, F. (2000), “Agglomeration economies, firm heterogeneity, and foreign direct investment in the United States”, Strategic Management Journal, no.21, pp.1175-1193.
30. Wooldridge, J.M. (2003), “Introductory Econometrics”, Cincinnati, OH: South-Western College Publishing.
31. Yoffie, D. (1993), “Foreign direct investment in semiconductors”, in Froot, K. (eds): Foreign Direct Investment, Chicago: University of Chicago Press.