FDI and inequality in Vietnam: An approach with census data |
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| Institution: | 1. Faculty of Commerce, Chuo University, 742-1 Higashinakano, Hachioji-shi, Tokyo 192-0393, Japan;2. Research Institute of Economy, Trade, and Industry (RIETI), 1-3-1, Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan;3. Research Project Center, Graduate School of Economics, Kyoto University, Yoshida-honmachi, Sakyo-ku, Kyoto 606–8501, Japan;1. Department of Economics, University of Hawai‘I, 2424 Maile Way, Honolulu, HI 96822, USA;2. School of Management and Economics, University of Electronic Science and Technology of China, No.2006, Xiyuan Ave, West Hi-Tech Zone, 611731, China;1. University of Hawai‘i at Mānoa, Department of Economics, Saunders Hall 531, 2424 Maile Way, Honolulu, HI 96822, USA;2. KDI School of Public Policy and Management, Republic of Korea;1. Department of Economics, University of Manitoba, Fort Garry Campus, Winnipeg, Manitoba, R3T 5V5, Canada;2. School of Banking & Finance, National Economics University, 207 Giai Phong Road, Hanoi, Viet Nam |
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| Abstract: | We investigate the effects of inward FDI on income distribution and absolute living standards in Vietnam using census data from 1989 to 2009. We compute the number of employees of foreign establishments in each of Vietnam's provinces for each year, and use that as a measure of local FDI. We estimate the effects of FDI on local households’ living standards as reported in the data, broken down by educational background to allow us to analyze effects on inequality. Estimates based on the repeated cross section indicate that rising FDI in a province is associated with a slight decline in living standards for households there if they do not have a member employed by the foreign enterprises, with only modest gains for households who do have a member employed by the foreign enterprises. These estimates may reflect composition effects, however, since we find large movements of people toward the provinces receiving the FDI. The findings show that measuring the effect of FDI on household welfare is more difficult than measuring the effect of trade policy, and may pose a difficulty for the view of FDI as a general anti-poverty strategy. |
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| Keywords: | Foreign direct investment Vietnam Living standards Inequality |
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