Impacts of Foreign Direct Investment Inflows on Employment in Vietnam

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Thai Quang Nguyen Lien Thi Kim Tran Phuong Linh Pham Thanh Duc Nguyen

Abstract

This paper assesses the impacts of foreign direct investment (FDI) on the demand for aggregate employment and skilled labour in Vietnam during the period from 2011-15. Thanks to deeper integration into the global economy, Vietnam has attracted a large amount of FDI which is a crucial driver for economic development. Employing panel data of all 63 Vietnamese provinces in the 2011-15 period and the fixed effects technique with robust standard errors, we show the adverse effects of FDI on demand for both aggregate employment and skilled labour in Vietnam. Interestingly, the absolute magnitude of the effect on employment of skilled labour is considerably larger than that of aggregate employment. In addition, the effects are positive in both the services and industry sectors, though in terms of magnitude, the effects in the latter are significantly lower than those in the former. The effects are negative in the agriculture sector. Rises in import-export scale increase the negative effects of FDI on demand for skilled labour.

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How to Cite
NGUYEN, Thai Quang et al. Impacts of Foreign Direct Investment Inflows on Employment in Vietnam. Institutions and Economies, [S.l.], p. 37-62, jan. 2020. ISSN 2232-1349. Available at: <https://ijie.um.edu.my/article/view/22022>. Date accessed: 18 feb. 2020.
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