The Rise of Viet Nam's Solar Panel Industry: Inputs, FDI and Spillovers

ABSTRACT

We document how foreign firms and inputs have shaped the development of Viet Nam's solar panel industry. We use firm‐to‐firm transaction data from Panjiva as well as firm‐level data from the Vietnamese Enterprise Survey to trace solar panel value chains. We uncover three key findings: First, China provides the majority of solar inputs to Vietnamese producers, and these are 50% cheaper than those from other countries on average. Second, Chinese FDI firms dominate Viet Nam's solar industry, accounting for 75% of exports and 50% of jobs, and they export solar panels that are 54% cheaper than those of other producers in Viet Nam. Third, local firms supplying parts and components to these Chinese FDI firms experience positive productivity gains. Our findings show how Viet Nam's solar boom emerged through deep integration into China's supply chains.