Host-Site Institutions, Regional Production Linkages and Technological Upgrading: A Study of Automotive Firms in Vietnam

Using technological capabilities as embodied in machinery, organization, processes and products, this study examines the links with host-site institutions and regional production linkages. The statistical results show no relationship between these variables. In-depth interviews complement the quantitative findings. Overall, the result shows that the government’s localization efforts failed because too many joint-venture assemblers were approved in the 1990s when the domestic market was small. The lack of economies of scale also affected the growth of national suppliers. Hence, national producers are confined to low value added segments and lack the quality to compete in export markets.