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Type: Book chapter
Title: FDI, financial constraints and productivity: firm-level study in Vietnam
Author: Thangavelu, S.
Findlay, C.
Chongvilaivan, A.
Citation: Real and Financial Integration in Asia, 2013 / Thangavelu, S., Chongvilaivan, A. (ed./s), Ch.6, pp.99-115
Publisher: Routledge
Publisher Place: United Kingdom
Issue Date: 2013
ISBN: 0415686431
Editor: Thangavelu, S.
Chongvilaivan, A.
Statement of
Shandre M. Thangavelu, Christopher Findlay and Aekapol Chongvilaivan
Abstract: Foreign direct investment (FDI) has been the key engine of growth for developing countries for the past decades. Developing countries have increasingly relied on FDI as a key engine of output, employment and productivity growth. The underlying rationale for attracting FDI in host countries rests with productivity spillovers associated with FDI, whereby positive externalities generated by multinational activities allow indigenous firms to pick up their productivity. Based on the transaction costs theory of FDI (Caves, 1996), multinational enterprises (MNEs) exploit superior knowledge (e.g. technological and informational advantage, managerial expertise and superior organizational structure) transferred from their foreign parents to compensate for the higher operating costs incurred in the host markets. MNEs are therefore expected to demonstrate higher performance in terms of profitability and productivity than domestically owned firms.
Rights: © 2013 ERIA
DOI: 10.4324/9780203104958-12
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