FDI’s Crowding out Effect on the Exit of Domestic Firms in the Textile and Garment Industry

Abstract

For the Vietnamese economy in general and the textile and garment industry in particular, FDI is a external resource that brings many positive effects. However, the presence of FDI enterprises can cause the negative impact of creating crowding out effect on domestic firms. This study is conducted to answer the question of whether the presence of FDI enterprises affect the survival of domestic firms or not? The authors apply the logistic regression model to analyze the crowding out effect of FDI on the exit of domestic firms, using the case of the textile and garment processing industry which has a key role in Vietnam manufacturing industry and also attracted a large amount of FDI in recent years, to find evidence for this impact. Thereby, the research team will gives some policy implications to minimize the negative impact (if any) of FDI on domestic firms.