LOCALIZING FOREIGN FIRMS IN VIETNAM THROUGH ANALYZING EFFECTS OF AGGLOMERATION ECONOMIES

Dinh Thi Thanh Binh

Abstract

Abstract
This paper studies the effects of agglomeration economies on the location choices by
foreign firms in Vietnam. By using a large dataset that provides detailed information about
individual firms, the study examines the location choices by 737 newly created foreign firms
in 2007 in about 125 different 4-digit industries. The estimates of the conditional logit model
show that agglomeration benefits motivate newly-created foreign firms to locate near other
foreign firms. Moreover, the results show that foreign firms in the same industries and from
the same countries of origin to locate near each other.
Key words: Agglomeration; Location choice; Foreign direct investment.