Sector Innovation Capacity in Vietnamese Enterprises: Spillover Effects from Research and Development

Abstract

This study investigates the spillover effects of Research Development (R&D), Foreign Direct Investment (FDI) and Trade on sector innovation capacity of Vietnamese Enterprises in manufacturing industries. The spillover effects are estimated under the idea of Spatial Regression; however, the weight matrix herein is Transaction weight matrix rather than Spatial weight matrix. This matrix is constructed from Input Output Table to reflect the relations between two sectors. By aggregating the data of firms of Vietnam Enterprises Survey (VES) and Vietnam Technology and Competitiveness Survey (TCS) from 2010 to 2013, this study explore some interesting findings. Firstly, R&D of a sector not only has directly positive impact on innovation capacity of that sector but also has indirectly positive impact on innovation capacity of other related sectors. Secondly, transaction to FDI customers seems to have positive effect on sector innovation capacity. Thirdly, export has only directly positive impact on sector innovation capacity. In contrast, the higher imported input of a sector, the lower innovation capacity of that sector and other related sectors. Finally, the scale-intensive producers sector and the specialized equipment supplier sector may have stronger spillover effect than supplier-dominated sectors.