Determinants of foreign direct investment inflows: The case of Vietnam
Abstract
Foreign direct investment is now becoming one of the most attentive issues towards not only policy makers but also researchers. However, in the current, few researchers carry out their investigation about foreign direct investment in Vietnam. Thus, the purpose of this paper is to study economic and social factors influence foreign direct investment inflow into both Vietnam and Thailand in the period of 40 quarters between 2003 and 2012. Thailand is put into research to have
the comparison among 2 nations. The relationship between foreign direct investment and 10 independent variables is examined by the regression analysis. The regression model is applied to find out the rate of change in foreign direct investment and volume of foreign direct investment. As a result, percentage change of merchandise import and investment climate proxied by corruption perceptions index are important determinants of both percentage change of foreign direct investment and volume of foreign direct investment in Vietnam. In the rate of change in foreign direct investment aspect, the empirical results of determinants of FDI for Thailand fit in with the result for Vietnam except growth rate of GDP, external debt, and percentage change of corporate income tax. In term of volume of foreign direct investment, the similar determinant between Vietnam and Thailand is investment climate. Consequently, to compete with other countries and attract more FDI poured into Vietnam, the government should impulse the development of economy, improve the
development of investment climate, and ensure economic and political stability.