Technology Spillover and Determinants of Firm Productivity: An Experiment from a Spatial Regression

Abstract

The objective of this study is to find out the determinants and spatial spillovers of enterprise productivity in Vietnamese manufacturing and processing industry during 2010-2019. The study uses a spatial regression model to estimate the spatial dependence of enterprise-level TFP. The results show that the technology spillover occurs positively among enterprises in the region, and this effect decreases rapidly with spatial distance. In addition, the study suggests that firms' productivity get benefits from their R&D and exports, employment density, market competition, and spending. Further analysis shows that the strength of the spillover effect is influenced by many other factors including area size, presence of FDI, administrative policy, border effect, infrastructure, financial factors, utility services, and human resources. These factors facilitate the smooth connection between major economic centers, creating strong inter-regional spillover effects. From the above findings, the study proposes necessary policy implications.