The Long-Term Effects of War on Foreign Direct Investment and Economic Development: Evidence from Vietnam

Nguyen, Cuong and Tran, Tuyen and Vu, Huong (2021): The Long-Term Effects of War on Foreign Direct Investment and Economic Development: Evidence from Vietnam.

Abstract

In this study, we find that the negative effect of unexploded ordnance (UXO) on the geographical density of foreign direct investment and large firms is a new channel through which the war legacy impedes local development in Vietnam. A 1% increase in the proportion of UXO-contaminated area leads to a 0.78% relative decrease in the density of FDI firms within districts. Point estimates for the elasticity of the density of joint-venture FDI firms and state-owned enterprise (SOEs) due to UXO are smaller, equal to -0.56 and -0.54. Consequently, a 1% increase in the proportion of UXO-contaminated areas leads to a 0.46% relative decrease in the intensity of nighttime light.

• Item Type: MPRA Paper
• Language: English
• Keywords: War; FDI; unexploded ordnance; local development; Vietnam.
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity

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