Multinational enterprises and industrial spatial concentration patterns in the Red River Delta and Southeast Vietnam

In many Southeast Asian countries, such as Thailand, the Philippines and Malaysia, the appearance of multinational enterprises (MNEs) as a consequence of open and liberal market reforms is increasing the concentration process, especially in and around the capital regions. MNEs are attracted by positive externalities provided by the large agglomerations. Additionally, Vietnam introduced an open-door policy with the initiation of the transition process in 1986. The question arises of whether MNEs will contribute to a regional increase or decrease in the spatial concentration of economic activities. In short, the paper analyzes the locational pattern of MNEs and their spatial impact. Since the economic transition to a socialist-oriented market economy in 1986, a large inflow of FDI has come mainly to the two most important economic regions in Vietnam, namely the Red River Delta (RRD) and the Southeast. Historically, the business climate in the Southeast is more market-oriented, whereas the socialist heritage of the planning system is stronger in the RRD. At first sight, industry in the RRD is less highly concentrated compared to the Southeast because MNEs try to avoid the locations with socialist remains. However, by means of an analysis using the continuous spatial concentration index, we detect that industrial production is also becoming more concentrated in the RRD.