Norbert Bozsik

Hungarian University of Agriculture and Life Sciences 

Hungary 

bozsik.norbert@uni-mate.hu 

ORCID 0000-0002-3115-6118

The effects of foreign direct investment on the performance of small-medium enterprises: The case of Vietnam

Duong Minh Ngo

MATE Doctoral School of Economic and Regional Sciences, 

Hungary;

Banking Academy of Vietnam, Vietnam

Ngo.Minh.Duong@phd.uni-mate.hu 

ORCID 0009-0009-5956-0508

László Vasa

Széchenyi István University 

Hungary 

vasalaszlo@gmail.com 

ORCID 0000-0002-3805-0244

Abstract. Foreign direct investment (FDI) is one of the most important elements influencing countries' international economic integration. FDI establishes direct, consistent, and long-lasting interconnections between economies as well as encouraging innovative technology and know-how transmission across territories while allowing host economies to offer their goods more extensively on global markets. FDI is also a source of investment financing that creates the climate for appropriate policies. Aside from the obvious advantages for all economic sectors, attracting FDI in small and midsize enterprises (SMEs) has a variety of additional benefits. For example, an opportunity to participate in the global supply chain for parts and components; an opportunity not yet wholly established in most developing nations but is critical for industrialization and improving income distribution through job creation for low-skilled employees. This study compared the impact of FDI on the performance of SMEs in Vietnam to that of a group of ASEAN nations with comparable economic structures including Indonesia, Malaysia, and Thailand. The empirical evidence indicates that FDI has a negative effect on the performance of SMEs in the group of four ASEAN member countries while having a positive influence on Vietnamese SMEs.

Received: May, 2022

1st Revision: February, 2023

Accepted: March, 2023

DOI: 10.14254/2071-8330.2023/16-1/4

JEL Classification: G21, L26, O16

Keywords: FDI, SMEs, globalization