MNEs vertical linkages: The experience of Vietnam after Malaysia

Knowledge transfer from multinational corporations to local suppliers in host developing countries have been shown to be substantial and a strong contributor to the competitive upgrading of firms in host economies. Using data provided by multinational subsidiaries, this paper compares the activities of multinationals in both Malaysia and Vietnam. Malaysia is considered because its experience with foreign direct investment is long standing (compared to Vietnam) and useful recommendations can be drawn for Vietnam, allowing for the transition nature of the Vietnamese economy. The objectives of the paper are two-fold: to demonstrate the potential for knowledge transfer between multinationals and their suppliers in both Malaysia and Vietnam; and to build upon this discussion to suggest avenues for Vietnam to maximise beneficial linkages from MNEs.