Economic linkages, technology transfers, and firm heterogeneity: The case of manufacturing firms in the Southern Key Economic Zone of Vietnam

Economic linkages, technology transfers, and firm heterogeneity: The case of manufacturing firms in the Southern Key Economic Zone of Vietnam

  • Chi-Hai Nguyen , Faculty of Economics, University of Economics and Law, 71309 Ho Chi Minh City, Vietnam & University of Economics and Law, Vietnam National University Ho Chi Minh City (VNU-HCM), 71309 Ho Chi Minh City, Vietnam
  • Quang-Thanh Ngo , School of Government, University of Economics Ho Chi Minh City, 72407 Ho Chi Minh City, Vietnam
  • My-Duyen Pham , Faculty of Economics, University of Economics and Law, 71309 Ho Chi Minh City, Vietnam & University of Economics and Law, Vietnam National University Ho Chi Minh City (VNU-HCM), 71309 Ho Chi Minh City, Vietnam
  • Anh-Tuan Nguyen , Faculty of Economics, University of Economics and Law, 71309 Ho Chi Minh City, Vietnam & University of Economics and Law, Vietnam National University Ho Chi Minh City (VNU-HCM), 71309 Ho Chi Minh City, Vietnam
  • Ngoc-Chuong Huynh , Faculty of Economics, University of Economics and Law, 71309 Ho Chi Minh City, Vietnam & University of Economics and Law, Vietnam National University Ho Chi Minh City (VNU-HCM), 71309 Ho Chi Minh City, Vietnam

Keywords:

Economic linkages; vertical (or backward) linkages, horizontal (or forward) linkages, key economic zone; manufacturing firms; Vietnam.

Abstract

The current article examines the factors affecting economic linkages in the Southern Key Economic Zone of Vietnam, using a unique 5-year firm-level dataset with 5050 observations, using a unique 5-year firm-level dataset with 5050 observations, which is collected and merged from two data sources namely the Vietnam Technology and Competitiveness Survey and the Vietnam Annual Enterprise Survey in 2015-2019. Empirical results from estimating panel logit models based on different types of economic linkages such as (1) backward economic linkage with the domestic supplier, (2) backward economic linkage with a foreign supplier, (3) forward economic linkage with the domestic customer, and (4) forward economic linkage with a foreign customer reveal the importance of firm characteristics, technology transfer, and economic constraints that cause firms to conduct economic linkages across firm sizes and types of ownership. There is clear evidence for the determinants of economic linkages in manufacturing sectors by firm sizes, and by ownership in this analysis are concerned. To be specific, based on a regression analysis, employment, firm’s experience, technology transfer, and economic constraints stand out as the major drivers of economic linkage of various forms. In addition, results reveal several patterns of economic linkages such as domestic technology embodied economic linkage, local supply-chain technology embodied economic linkage, international/global supply-chain technology embodied economic linkage, local market-explored economic linkage, local market privilege, and foreign market privilege. Moreover, it is evidence that investments in basic infrastructure, transport infrastructure, communication infrastructure, removal of financing constraints, increase the labor supply, improvement of working skills of laborers have favored the growth of economic linkages. Our results initiate policy implications in the context that, apart from the firm’s and the industry sector’s characteristics, economic obstacles and the nature of technology transfer significantly influence the firm’s behaviors of conducting economic linkages in various firm sizes and types of ownership.

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