THE IMPACT OF TECHNOLOGY SPILLOVER FROM FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH: EVIDENCE IN VIETNAM

This study aims to provide an empirical research of FDI spillover effect in Vietnam province level. The frameworks of the spillover effect of FDI, which follow the past studies (Alfaro, 2004) and (Alfaro, 2009), describe the effect of FDI on economic growth of each province. The Dixit-Stiglitz aggregator in the intermediate goods market is used as same as product variety model, which is used in Romer's study (1992). The main purpose of those studies is that showing FDI can have a negative effect on province economic growth because of the gap between domestic technology level and foreign technology level. The co-integrated effect between FDI and productivity perform their positive significant on economic growth. The empirical results are conducted by using Different-General Method of Moments (GMM) (Blundell and Bold, 1998) and Fixed effect GLS (Fixed-EGLS) (Wooldridge, 2010) with Vietnamese provinces panel data. Those two methods, which are recently used by many researchers, are highly recommended in this study. Before policy makers apply researcher's suggestions for their country's economy, understanding FDI spillover and its effect on economic growth are very importance. The empirical evidence for a positive spillover effect on growth is very important.