FDI, Market Power, and Markups : Evidence from Vietnam

To date, the impact of foreign direct investment on market power and consumer welfare in developing countries has been relatively understudied. Utilizing a firm survey dataset from Vietnam, this paper first calculates firm-level markups for manufac...

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Main Authors:	Li, Yue, Kuo, Ryan, Pinzon Latorre, Mauricio, Albertson, Mark
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2022
Subjects:	FOREIGN DIRECT INVESTMENT FIRM MARKUPS COMPETITIVENESS STATE-OWNED ENTERPRISES PRIVATELY HELD FIRMS MARKET POWER COMPETITION ECONOMICS
Online Access:	http://documents.worldbank.org/curated/en/099233104062246175/IDU0d919c31a0a8aa048c7090f605fdc84b632b0 http://hdl.handle.net/10986/37284

id	okr-10986-37284
recordtype	oai_dc
spelling	okr-10986-372842022-04-09T05:10:36Z FDI, Market Power, and Markups : Evidence from Vietnam Li, Yue Kuo, Ryan Pinzon Latorre, Mauricio Albertson, Mark FOREIGN DIRECT INVESTMENT FIRM MARKUPS COMPETITIVENESS STATE-OWNED ENTERPRISES PRIVATELY HELD FIRMS MARKET POWER COMPETITION ECONOMICS To date, the impact of foreign direct investment on market power and consumer welfare in developing countries has been relatively understudied. Utilizing a firm survey dataset from Vietnam, this paper first calculates firm-level markups for manufacturing firms and then analyzes the impact of foreign direct investment and foreign ownership on firm markups. Overall, the findings show that increases in the presence of foreign firms in a given industry are associated with decreases in markups in that industry, despite foreign firms individually charging higher markups on average than their domestic competitors. The findings further show that while the markups of both foreign- and domestic-owned private firms tend to decrease with greater foreign direct investment, state-owned enterprises may be relatively insulated from foreign direct investment driven competitive pressures. These results are robust to the inclusion or exclusion of potential outliers and the potential non-random selection of firms acquired by foreign investors. 2022-04-08T21:17:08Z 2022-04-08T21:17:08Z 2022-04 Working Paper http://documents.worldbank.org/curated/en/099233104062246175/IDU0d919c31a0a8aa048c7090f605fdc84b632b0 http://hdl.handle.net/10986/37284 English Policy Research Working Paper;9998 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Policy Research Working Paper Publications & Research Vietnam
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	FOREIGN DIRECT INVESTMENT FIRM MARKUPS COMPETITIVENESS STATE-OWNED ENTERPRISES PRIVATELY HELD FIRMS MARKET POWER COMPETITION ECONOMICS
spellingShingle	FOREIGN DIRECT INVESTMENT FIRM MARKUPS COMPETITIVENESS STATE-OWNED ENTERPRISES PRIVATELY HELD FIRMS MARKET POWER COMPETITION ECONOMICS Li, Yue Kuo, Ryan Pinzon Latorre, Mauricio Albertson, Mark FDI, Market Power, and Markups : Evidence from Vietnam
geographic_facet	Vietnam
relation	Policy Research Working Paper;9998
description	To date, the impact of foreign direct investment on market power and consumer welfare in developing countries has been relatively understudied. Utilizing a firm survey dataset from Vietnam, this paper first calculates firm-level markups for manufacturing firms and then analyzes the impact of foreign direct investment and foreign ownership on firm markups. Overall, the findings show that increases in the presence of foreign firms in a given industry are associated with decreases in markups in that industry, despite foreign firms individually charging higher markups on average than their domestic competitors. The findings further show that while the markups of both foreign- and domestic-owned private firms tend to decrease with greater foreign direct investment, state-owned enterprises may be relatively insulated from foreign direct investment driven competitive pressures. These results are robust to the inclusion or exclusion of potential outliers and the potential non-random selection of firms acquired by foreign investors.
format	Working Paper
author	Li, Yue Kuo, Ryan Pinzon Latorre, Mauricio Albertson, Mark
author_facet	Li, Yue Kuo, Ryan Pinzon Latorre, Mauricio Albertson, Mark
author_sort	Li, Yue
title	FDI, Market Power, and Markups : Evidence from Vietnam
title_short	FDI, Market Power, and Markups : Evidence from Vietnam
title_full	FDI, Market Power, and Markups : Evidence from Vietnam
title_fullStr	FDI, Market Power, and Markups : Evidence from Vietnam
title_full_unstemmed	FDI, Market Power, and Markups : Evidence from Vietnam
title_sort	fdi, market power, and markups : evidence from vietnam
publisher	World Bank, Washington, DC
publishDate	2022
url	http://documents.worldbank.org/curated/en/099233104062246175/IDU0d919c31a0a8aa048c7090f605fdc84b632b0 http://hdl.handle.net/10986/37284
_version_	1764486871661936640

FDI, Market Power, and Markups : Evidence from Vietnam

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