Influence of International trade and FDI on the growth of Vietnam economy : During 1986-2019 period

Abstract

Since Doi Moi (Innovation) period in 1986, trade openness has been embarked by Vietnam, which leads to increased international trade flows, together with increased foreign direct investment (FDI) flows. The nexus between foreign trade and Foreign Direct Investment (FDI) with economic success has been a great topic of international development. Although there are rich insights into the influence of international trade and FDI on sustained growth in developing countries, it appears to have very few empirical analyses linked to Vietnam. Therefore, this paper investigates the influence of foreign trade (including total exports and total imports) and FDI on Vietnamese economic expansion over the course of 1986 to 2019 utilizing secondary data from the World Bank Database (WB). In particular, the ordinary least squares (OLS) which is applied analyzes the influence of international trade and FDI on Vietnamese growth performance. The figures over a 1986-2019 study indicate that FDI, export, and import have all favorable and statistically significant effects on the growth rate of the economy in the long-run. In the short term, previous years’ impacts should be added up to determine the impact of exports and imports. The result indicates that FDI an impact on GDP in the short term.