Transnational companies as a source of skill upgrading: The electronics industry in Ho Chi Minh City

Employment and training in TNCs constitute a potential route through which FDI-led industrialization can contribute to national and regional development and economic growth. The article explores this link through the case of TNCs in the electronics industry in Ho Chi Minh City, Vietnam. The skill upgrading contribution of TNCs is related to the type of factories located in Vietnam and the role they play in regional production networks using a model combining the reverse product cycle and regional waves of FDI. Most electronics factories in Vietnam are 'reproduction factories' with mature technology and a narrow role in basic component manufacturing; it is shown that their contribution to skill upgrading is correspondingly narrow. Training for the majority of employees is very simple, and those who receive additional training do this especially in labour management, not in technical fields. Only a small group of engineers receive advanced technical training, in Vietnam and in the parent company abroad. The best prospects for increased skill upgrading are found in those companies that are more than reproduction factories for assembly; however, such companies are still few. The TNCs also represent a potential contribution to skill upgrading in local firms through supplier linkages and movement of staff, but when they operate in isolation from a local economy with little absorptive capacity, as in this case, this potential is not realized.