LOCATION AND BUSINESS-LEVEL PRODUCT INNOVATION IN VIETNAM: REGIONAL DIFFERENCES AND DRIVERS

Using data from the Investment Climate Survey published by the World Bank, this paper estimates the determinants of business level product innovation in Vietnamese enterprises. In particular the paper sheds light on the effect of location on the likelihood of business-level innovation, while also controlling for business-specific factors. The paper also explores the relative importance of the drivers of business innovation across Vietnamese regions. It finds that businesses in the Red River Delta Region, which includes Hanoi, were significantly more likely to introduce new and upgraded products than businesses in other regions. The results suggest that the capital city region had an advantage over other regions for product innovation, challenging popular conceptions of Ho Chi Minh City as the engine of Vietnamese entrepreneurship. The results further suggest that place-based policies may be an important element of successful innovation policy in Vietnam, as they are in developed countries, and that a ‘one-size-fits-all’ approach to innovation supports is likely to be suboptimal.