Globalization, FDI and employment in Viet Nam Rhys Jenkins* The article considers the impact of foreign direct investment on employment in Viet Nam, a country that received considerable inflows of foreign capital in the 1990s as part of its increased integration with the global economy. Despite the significant share of foreign firms in industrial output and exports, the direct employment generated has been very limited because of the high labour productivity and low ratio of value added to output of much of this investment. The article also shows that the indirect employment effects have been minimal and possibly even negative because of the limited linkages which foreign investors create and the possibility of “crowding out” of domestic investment. Key words: foreign direct investment; employment; Viet Nam; manufacturing; capital-intensity Introduction The impact of globalization on employment is a central issue of contemporary political economy. From the point of view of workers in developed countries, globalization is often seen as a threat as traditional industrial jobs disappear or are relocated around the globe (and not just traditional jobs, as the recent expansion of call centres in India and elsewhere illustrates). On the other hand, increased employment in developing countries is seen as a major contribution to reducing poverty and meeting the Millennium Development Goals. However, the impact of globalization on labour markets and the mechanisms through which closer integration with the global economy may lead to job creation are still a subject of * Rhys Jenkins is a Professor in Development Studies at the University of East Anglia, Norwich, United Kingdom. The research on which this article is based was funded as part of the DfID CSSR project on “Globalisation, Production and Poverty: Macro, Meso and Micro Level Studies” of the Globalisation and Poverty research programme. The views and opinions
