The Impact of FDI on the Industrial Upgrading Progress and the Sustainable Economic Growth of Vietnam

Abstract: This paper examines the impact of foreign direct investment (FDI) in the industrial upgrading process of Vietnam based on the concept of the new structural economics. The most recent development of industries in Vietnam is analysed using the annual data published by the statistical office of Vietnam and the studies done by various academics on spillovers effects of FDI. The paper finds the an important role of spillovers effects such as technology transfer, linkages, exports and wage spillovers of FDI to the relatively more sustainable development of the industries. However, the government’s support and role is another crucial ingredient in reaping the benefit that FDI brings into the country. The interrelated and inextricable relation among FDI, the role of government and the development level of the economy, points out that a strategic and balance measure in terms of policies and infrastructure facilitation, is needed in going forward on the industrialisation process for Vietnam.