Applying Consistency Fuzzy Preference Relations to Select a Strategy that Attracts Foreign Direct Investment (FDI) in Developing Supporting Industries for Vietnam

In the early 2000s, Vietnam’s government concentrated on the promotion of supporting industries which can be seen as a “key” solution to sustaining economic growth, thereby improving the national welfare. However, Vietnam’s supporting industries still exhibit lower development and competitive weakness. The main reason for this condition is due to a lack of capital, technological innovation, and necessary management skills for development. Therefore, attracting foreign direct investment (FDI) for developing supporting industries offers the best strategy to realize this solution. However, attracting FDI to develop supporting industries represents a weakness which lies in both the quantity (total capital and projects) and quality of investment. So which factors are effective to attract FDI for developing supporting industries in Vietnam? This investigation establishes an analytical hierarchy framework available to the Vietnamese government and to policymakers in order to evaluate the influence of criteria needed to attract FDI for developing supporting industries based on eight main criteria. They include legal and institutional criteria, the market size of supporting industries, human resources, infrastructure facilities, technological development and innovation, domestic supply capacity, international cooperation and competition, and other criteria. This paper uses fuzzy preference relations (FPR) to evaluate the influence of criteria necessary to attract FDI for developing supporting industries, and these analytical results demonstrate that legal and institutional criteria, domestic supply capacity, human resources, technology development and innovation are all major considerations for attracting FDI.

This study investigates the relationship between sustainable economic growth and foreign direct investment (FDI) in Saudi Arabia from 1980 to 2023. The ARDL approach and VECM technique are employed to analyze the short-run and long-run dynamics. The short-run results show mixed effects. Sustainable economic growth has a positive impact on current and one-period lagged FDI but a negative impact on the two periods lagged. Trade openness and infrastructure negatively affect FDI in the short run. Interestingly, oil rents and real economic growth also have negative short-run impacts on FDI, but these effects become positive with a longer lag. Long-run analysis reveals a negative relationship between trade openness, infrastructure, and oil rents with FDI, suggesting a potential crowding-out effect. Trade openness has a positive long-run impact on most variables, including sustainable growth, FDI, real growth, and CO2 emissions. Oil rents also have a positive long-run impact on these variables. This study finds six bidirectional causal relationships in the short run, primarily between trade openness, infrastructure, oil rents, and FDI. Unidirectional causality runs from oil rents, trade openness, exchange rate, sustainable growth, and real growth to FDI and infrastructure. Additionally, CO2 emissions cause FDI, and trade openness causes sustainable growth. While sustainable economic growth benefits FDI in the long run, short-term policies regarding trade openness and infrastructure require reevaluation. Oil revenue and real economic growth may initially deter FDI, but this reverses in the long term. To attract sustainable FDI, policymakers should focus on long-term economic growth strategies and consider reforms in trade and infrastructure policies. A comprehensive FDI strategy that moves beyond oil dependence and leverages trade openness is crucial to long-term economic diversification.

Vietnam's phenomenal economic development has coincided with a substantial increase in FDI inflows and hence led researchers, including the author, to believe that increased inflows of FDI into Vietnam have had important implications for the country's trade and economic expansion over the past decades. This dissertation investigates factors determining foreign direct investment (FDI) inflows and the effects of FDI inflows on economic growth and trade in Vietnam and its different regions over the 1993-2006 period. The study reveals that wages, income per capita, GDP growth and accumulated FDI stock as well as openness to trade and special economic zones are important factors attracting FDI inflows into Vietnam. Human capital has not yet been a significant factor determining FDI inflows because FDI activities in Vietnam are mainly in labor-intensive industries in which a large number of skilled labor is not yet required. The existing physical infrastructure in Vietnam does not help attract FDI inflows either and this implies that an improvement in its quality is needed. Economic growth and FDI in Vietnam have a positively significant relationship. The beneficial effect on growth of FDI comes from stock of foreign capital that has been accumulated over the years. At the regional level, higher capital flow of foreign direct investmentis a major factor stimulating economic growth in the Northern region. The flow of superior technologies transferring from FDI firms can also help to increase the growth rate of the Central region by interacting with the region's open trade regime. The contribution of FDI to economic growth in the Southeastern region is explained by both foreign capital accumulation and new technologies and knowledge transferred from FDI enterprises through human capital. In all regions, inward FDI has a complementary relationship with Vietnam's exports, imports and total trade, implying that the FDIs are mostly of the vertical type. However, the patterns of the FDI-trade relationships between Vietnam and different partner countries show variations. To attract more FDI inflow into Vietnam and sustain the economic development, Vietnam has to improve the country's income per capita, GDP growth rate and trade openness. The Vietnamese government needs to pay more attention to improved quality of human capital, physical infrastructure as well as putting effect to enhance the investment environment in order to attract FDI inflows into a more tecnology-intensive line of production in the future.

Domestic investments are essential to develop of each country, but sometimes insufficient, in most countries that aim for sustainable and long-term growth. Hence, most countries, and Kosovo, have a continuing need for additional capital, which, with adequate institutional policies, can be provided through Foreign Direct Investment (FDI).While in developed countries there are debates about and against FDI (especially about the type of FDI when an investment can be made from domestic capital), in underdeveloped and developing countries there is a consensus on the need for FDI to meet the need for investments that can not be realized through local investment.Several emerging countries and Kosovo have made constant efforts to increase these investments but have faced significant problems in attracting foreign investors. Disadvantaged institutional policies, including monopoly policies and fiscal policies, have been one of the limiting factors.This paper aims at analyzing current policies related to attracting FDI and identifying and analyzing institutional policies that are facilitating FDI, but the main focus will be on current and potential policies that can will negatively impact on FDI withdrawal. At the end of the paper, some conclusions will be drawn based on research on the current situation as well as some recommendations on policies that may advance attracting Foreign Direct Investment (FDI).

The Future of Foreign Investment in Southeast Asia. Edited by Nick J. Freeman and Frank L. Bartels. London and New York: Routledge Curzon, 2004. Pp. 288. Ever since Singapore took the bold step towards attracting foreign direct investment (FDI) in the 1970s, and grew to be a success, the other Southeast Asian economies did not wait too long to follow suit albeit at a slower pace, and today, there is such stiff competition among the economies to woo FDI for sustained economic growth. Thus, for Southeast Asia, FDI has become somewhat a necessity, and this underscores the importance of the contribution of this book. In addition, much has changed in the circumstances surrounding FDI - the type of economies courting FDI, differences in the kind of FDI sought, the reasons and policies in place for attracting FDI, the nature of parent companies, the effects on and from FDI due to the increasingly globalized environment in the face of liberalization,... The list is endless, and thus the book is a timely welcome to take stock of what has happened and to discuss the future direction of the all-important FDI for this region. While it is a tough task to present the various facets of the dynamism around FDI in the region in a single volume, the editors of the book have done a good job in the selection of topics which are wide ranging and provide much scope for discussion. Incidentally, I would like to suggest that after the introductory chapter, readers move on to the last chapter by Hal Hill as it is a good review and a critique (to some extent) of the chapters presented in this book. I am not sure whether this made my task of reviewing the book an easy or difficult one. Nevertheless, in retrospect, it is highly recommended that more of the edited volumes take on this integrated approach in order to give the ideas in the book a good bind. It is thus quite appropriate that I start with the last chapter. Let me first say that I agree with Hill's remark that the seriousness of the decline in FDI due to the 1997/98 Asian financial crisis is unduly magnified by some of the other contributors. The discussion and supporting evidence provided by Hill in making this point is convincing. There seems to be a preoccupation with the gloom brought about by the crisis, and perhaps this might have been the case at the time of writing. I also disagree with the notion that policy-makers in Southeast Asia are slow to recognize and react to the sorts of changes in global business and FDI activity. While there may be some isolated support for this, one can also ask if being cautious and ensuring that one is ready before reacting impulsively qualifies for such criticism. Economies within the region operate quite differently and institutions in place dictate the pace of reaction to FDI activity and policies governing FDI. In addition, there is a subtle contradiction in two related views of Hill's. One advocates that Singapore be emulated by the other Southeast Asian economies and another strongly advises that economies move away from the second-best approach of proving incentives to adopt the first-best approach of addressing the source of unattractive features of the host economic environment. When Singapore first started courting FDI, the so-called second-best approach was an important feature and, in essence, was the optimal strategy at that time. Today, a mixed rather than the first-best approach defined by Hill would be best - that is, a combination of both approaches. In times of stiff competition to attract FDI, economies have little choice but to provide incentives in addition to improving the economic and business environment of their economy, or they stand to lose more than they gain in terms of luring FDI. …

The Foreign Direct investment (FDI) plays crucial role on an economy, especially the developing countries like Vietnam. FDI impacts strongly and deeply on the economic sector in a nation. This paper has an objective to measure the impact of FDI on logistics transport development in Ho Chi Minh (HCM), Vietnam by using multivariate regression. The important results are: while registered FDI capital and number of FDI projects have impact, operating FDI capital does not impact productivity of freight calculated on labour of logistics transport industry (LTI); while number of FDI projects and operating FDI capital have impact, registered FDI capital does not have impact on productivity of passenger based on labour in LTI calculations; while registered FDI capital and number of FDI projects have impact, operating FDI capital does not impact productivity of freight calculated on capital in LTI; while registered FDI and operating FDI had impact, number of FDI projects does not impact gross domestic products.

The intersection of International Human Rights Law and Foreign Direct Investment (FDI) highlights a critical dimension of globalization that affects global business practices and human rights protections. As multinational corporations expand their operations across borders, the impact of their activities on human rights becomes increasingly significant. Ensuring that FDI respects and upholds international human rights standards is crucial for fostering ethical and sustainable development. Economic globalization refers to the increasing integration and interdependence of national economies through the cross-border exchange of goods, services, information, and capital. FDI plays a central role in this process as a critical mechanism for international capital flow. FDI occurs when a firm from one country establishes or expands business operations in another, influencing the host country's economic development, trade, and employment. FDI fosters economic growth by enhancing technology transfer, improving management practices, and increasing competition. However, it also raises concerns over potential labor exploitation, environmental degradation, and erosion of local industries. The relationship between FDI and globalization highlights the opportunities and challenges countries face as they become more interconnected in the global economy. Policymakers aim to balance attracting FDI while protecting domestic interests and promoting sustainable and inclusive growth. This paper examines the intersection of Foreign Direct Investment FDI and international human rights law, focusing on developing economies. It highlights the benefits of FDI in fostering economic growth, technology transfer, and employment while addressing concerns over labor exploitation and environmental degradation. The study explores how international legal frameworks, such as the UN Guiding Principles on Business and Human Rights, can help mitigate these risks, offering strategies for aligning FDI with human rights standards in developing countries. This study is significant as it provides insight into how developing countries can benefit from FDI without compromising their commitment to human rights protections, a critical balance in the era of economic globalization. This study will examine these problems with specific reference to the developing countries. 1) The influx of FDI either improves human rights standards or exacerbates human rights violations in developing economies. 2) International human rights standards legally bind MNCs, who are held accountable when violations occur in host countries. 3) Economic globalization has facilitated stronger human rights protections but also created challenges for enforcement in developing countries. 4) Institutions like the IMF and World Bank ensure that their policies promote FDI while respecting human rights standards, and these measures are adequate to varying degrees. 5) Developing countries can adopt specific strategies or legal frameworks to ensure that FDI aligns with human rights obligations. 6) Current international legal instruments, such as the UN Guiding Principles on Business and Human Rights, are adequate in addressing human rights violations linked to FDI.

Foreign Direct Investment (FDI) has a significant impact on an economy, particularly in developing countries such as Vietnam. FDI has a strong and deep impact on almost all economic sectors in a country. The goal of this paper is to use multivariate regression to assess the impact of IDF on logistics transport development in Ho Chi Minh City, Vietnam (HCM). The important findings are that, while registered FDI capital and the number of FDI projects have an impact, operating FDI capital has no impact on freight productivity calculated on labour in the logistics transport industry (LTI). While number of FDI projects and operating FDI capital impact, registered FDI capital does not impact on productivity of passenger that calculated on labour in LTI.  While registered FDI capital and the number of FDI projects have an impact, operating FDI capital has no impact on freight productivity, which is calculated using capital in LTI. While registered FDI and operating FDI have an impact, the number of FDI projects has no effect on GDP.

Foreign direct investment (FDI) is essential for promoting sustainable economic development, especially in developing countries such as Saudi Arabia, by enhancing productivity and competitiveness. This study explores the impact of FDI and unemployment on sustainable economic growth in Saudi Arabia, focusing on data from 1991 to 2022. FDI enhances productivity and competitiveness, while unemployment hinders growth. Understanding the interplay between FDI, unemployment, and economic growth is crucial for understanding modern economic systems. The research aims to understand the relationship between FDI and unemployment in Saudi Arabia.With the help of impulse response functions and variance decomposition analysis, the study shows how changes in foreign direct investment affect GDP, unemployment, and CO2 emissions over time. The impulse response analysis shows that a sudden drop in foreign direct investment has a positive and long-lasting effect on GDP but a negative effect on unemployment that lowers unemployment rates over time. Still, CO2 emissions have slightly gone up in response to FDI. This suggests that while FDI may help the economy grow, it may also make environmental problems worse. Over time, the variance decomposition results show that FDI gradually explains a larger part of the variation in GDP, while unemployment's effect on GDP decreases. This highlights how important FDI is for boosting economic growth. This research enhances the current body of knowledge about the correlation between foreign direct investment, unemployment, and sustainable economic growth. The findings indicate that governments ought to cultivate a favorable climate for foreign direct investment while enacting initiatives to mitigate unemployment. The report promotes a balanced strategy that utilizes FDI to foster economic growth while considering its environmental consequences to guarantee sustainable development in Saudi Arabia.

In this paper, we focused on the relationship of the overseas clusters and location choice for Chinese enterprises' foreign direct investment, both of which have recently become hot topics of theory research and policy concern. For there exists a big difference of economy condition in different host countries, China's enterprises pay attention to specific economic factors of host countries in location choice of foreign direct investment, and host countries' economic scale, per capita income, trade openness, resource conditions and other elements constitute the factors influencing location choice of enterprise' foreign direct investment. In addition,the overseas cluster of home countries' enterprises in host countries is another significant factor that cannot be ignored for enterprise' decision of foreign direct investment location choice. This paper structured the binary choice model by using the micro data of enterprises in Zhejiang province, and used the number of foreign direct investment projects in certain host country of Zhejiang's enterprises to measure the overseas cluster in that country. Based on these data, an empirical study was conducted in this paper and found that overseas enterprise cluster is an important location advantage for the host country to attract foreign direct investment from new enterprises. Furthermore, this advantage plays a greater role in countries that have richer resources and larger market scales. What is more, in order to eliminate the endogenous regression problem, the geographic distance was taken as the instrumental variable of enterprises' overseas cluster and a similar conclusion through two stage binary choice model was reached. We also found that the positive influence of enterprise overseas clusters on the attraction of new enterprises' foreign direct investment exist in both developed and developing host countries. The results of this paper indicated that there is self-continuity in the direct investment of foreign enterprises overseas cluster and reflected the importance of information in location choices for enterprises' foreign direct investment as well.

Foreign Direct Investments (FDI) has been considered an important source of economic growth and technological development in transition economies. The previous empirical literature has shown that FDI promote economic growth via complementary effects on domestic investments, increases in productivity and overall economic efficiency, giving rise to an increasing interest in understanding the key determinants of FDI. Apart from traditional FDI determinants, favourable tax policy has been considered an important factor influencing MNCs’ location decisions. The goal of this paper is to investigate the impact of corporate income tax on FDI in the context of less advanced transition economies and to analyse whether the tax effect is conditional on the level of economic development. A small number of studies exist analysing the importance of tax policy regime in attracting FDI covering South-East European countries. In this study, we rely on panel gravity econometric framework and examine the impact of tax policy on FDI using bilateral FDI flows between 8 home and 8 South East Europe host countries in the period 2000–2018. We estimate the regression using Prais-Winsten correlated panels corrected standard errors PSCE method to obtain robust estimates of individual effects in the presence of heteroscedasticity and serial correlation. The seven SEE host countries included in the sample are considered of similar economic structures and institutional transformation, which seems important in analysing tax policy effectiveness and minimising biases associated with econometric modelling of FDI determinants. Finally, we study this relationship in an integrated framework considering traditional gravity forces as well as a number of additional FDI determinants, including institutional factors. We show that, although tax policy seems an important determinant of FDI, its effects seem to be conditional on the level of technological development. Given these findings, reducing corporate income tax may be considered an effective tool in promoting FDI, which seems to be of particular importance for less developed transition economies. The results are robust to different model specifications and consideration of endogeneity.Implications for Central European audience: The direct implications of this research for business policymakers in CEE include the need to revise and optimise the levels of corporate income tax and incorporate this specific policy instrument in FDI strategies. In particular, the results of this research indicate that tax cuts have been more effective in attracting FDI in countries that are at a lower level of technological sophistication. The managers could seek to size the investment opportunity related to possible further corporate income tax cuts in the group of least developed CEE amid the economic rationale for tax policy competition among these countries.

DOI: 10.1355/ae23-3k Managing FDI in a Globalizing Economy. Edited by Douglas H. Brooks and Hal Hill. New York: Palgrave-MacMillan, 2004. Pp. 340. co-editors begin their volume by putting forth two propositions that provide the foundation upon which the remainder of their book's contents are constructed. first is: Investment, whether domestic or foreign, is an essential ingredient for sustainable growth: productive investment translates into increased output. Especially where domestic resources are insufficient to steer a country towards its long-term growth path, the role of foreign investment becomes indispensable (p. xvii). second is: Whether, and the ways in which, FDI is beneficial or harmful to the host country depends on the context in which the investment takes place and in which the resulting economy activity occurs (p. 8). volume presents examinations of the two propositions in eight chapters with the first two providing a general historical and empirical background that sets the stage for analyses of six countries' experience with foreign direct investment (FDI). focus is on the People's Republic of China, India, the Republic of Korea, Malaysia, Thailand, and the Socialist Republic of Vietnam. chapters, written by the co-editors and thirteen other competent and thoughtful scholars, were supervised and co-ordinated by the Asian Development Bank (ADB) staff professionals. ADB maintains a continuing interest in encouraging debate over the various aspects of FDI flows and the collateral activities of multinational enterprises (MNEs) that are conducted in a highly globalized world that includes the above whose populations collectively comprise more than 40 per cent of the world's population. evaluation of whether FDI is beneficial or harmful, and in what proportion, starts with the observation that until the 1980s many developing viewed FDI with great wariness because of its magnitude and the sheer size of MNEs from which the investments flowed. enterprises were suspected of practising harmful unfair business practices, price fixing, and transfer pricing, and their links to parent companies residing in developed, market-economy posed problems. During the 1980s, a transformation took place since as many restrictions imposed against FDI and MNEs were lifted in the face of beneficial technological change, integrated production and marketing networks, bilateral trade and investment treaties and the success of economies that were open to trade, investment and financial capital transformation took place partly because, in the judgement of some analysts: The establishment of a multilateral framework of rules ... (helped) to improve the investment climate; create a stable, predictable, and transparent environment for investment; enhance business confidence and thereby promote the growth of FDI flows. Other less enthusiastic observers cautioned that, Such favorable long-term outcomes may, however, be accompanied by arduous adjustments. It is therefore important to minimize the adjustment costs faced by developing countries (p. 26). book's contents add to the debate over the role of FDI in a highly open global economy in which developing are intricately enmeshed. Chapters 3 through 8 evaluate the circumstances under which FDI has been and could continue to be beneficial to developing countries. Not surprisingly, the contributors do not fully agree on what circumstances are important and useful in their pursuit of national economic goals. …

This research examines the correlation between foreign direct investment (FDI), gross capital formation (GCF), financial development, and renewable energy consumption (REC). The research utilizes the CS-ARDL and NARDL estimates to identify a strong and statistically significant connection, both in the long-term and short-term, between Foreign Direct Investment (FDI), Gross Capital Formation (GCF), financial development, and Regional Economic Cooperation (REC). More precisely, a 10% alteration in Foreign Direct Investment (FDI) leads to a 1.545% augmentation in Research and Development Expenditure (REC) over an extended period of time, and a 0.735% boost in the immediate term. Likewise, favorable (unfavorable) advancements in foreign direct investment (FDI) hasten (diminish) the pace of economic growth in the long term. The analysis also demonstrates a strong and statistically significant relationship between GCF and REC, highlighting the advantageous impact of domestic capital creation on the integration of clean energy. Moreover, it reveals a favorable correlation between financial development and REC, indicating that the financial incentives enabled by financial development have a crucial impact on encouraging the use of renewable energy. These results are consistent with previous research and have important consequences for the connection between foreign direct investment (FDI), gross capital formation (GCF), financial development, and sustainable energy. Nonetheless, the study highlights the importance of taking into account the nature and caliber of foreign direct investment (FDI) inflows, the influence of fair and sustainable growth in the renewable energy sector on the environment and society, and the possible environmental and social consequences of renewable energy projects fueled by domestic capital expansion. Furthermore, it emphasizes the need of well-rounded policy frameworks and governance mechanisms to guarantee that foreign direct investment (FDI), green climate fund (GCF), and financial development effectively contribute to equitable and sustainable growth in the consumption of renewable energy. The study's findings offer valuable insights on how to effectively use foreign direct investment (FDI), global climate finance (GCF), and financial development to increase the use of renewable energy. However, it also emphasizes the importance of carefully evaluating the wider consequences and related factors in order to develop sustainable strategies for promoting renewable energy consumption.

The objective of this study is to examine the degree to which foreign direct investment (FDI) and technological activity have contributed to export competitiveness and economic growth in East Asia. The links between export competitiveness and its main contributory factors, namely FDI and domestic technological effort which include research and development (R&D), learning-by doing, adaptation and copying have not yet been fully explored. The ways in which these links are forged differ among countries. Some countries have placed less emphasis on FDI and the presence of transnational companies (TNCs), relying instead on building domestic technological capacity through R&D efforts, adaptation and so on. Some others have depended largely on TNC presence for their technology development and upgrading. These differences in the strategies adopted by countries in their technology development pose two important questions. They are: (i) what are the most effective ways in which technology transfer could take place through FDI? And (ii) how to adopt alternative ways of technology development in lieu of FDI?

Japanese manufacturing small and medium enterprises (SMEs) have actively undertaken Foreign Direct Investment (FDI) in Asia since the mid-1980s. FDI contributes to economic growth of the FDI recipient countries, as it brings in not only financial resources for investment but also technologies and managerial know-how, which are important factors for promoting economic growth. Recognizing these benefits of receiving FDI, policy makers in developing countries have formulated various strategies to attract FDI. This paper examines the factors in the host countries that would attract FDI by Japanese SMEs. Our results show the importance of both supply-side and demand-side factors in the recipient countries for attracting FDI by Japanese SMEs. Supply-side factors include abundance of low-wage labor, availability of well-developed infrastructure, and good governance of the host government, while an important demand-side factor is the presence of sizable local market. In addition, Japanese SMEs regard industrial agglomeration, which has a element of both supply and demand factors, as an important factors making FDI decision. Supply-side factors are found to be important for attracting Japanese FDI in developing countries, while demand-factors play a role in attracting Japanese FDI in developed countries. A comparison of the results for SMEs to those for large firms reveals that SMEs are more sensitive to the conditions in the host countries in making their FDI decision. In particular, SMEs regard the availability of low-wage labor, well-developed infrastructure, and industrial agglomeration as important elements much more than large firms. High sensitivity of SMEs to local economic conditions in their decision on FDI location may be explained by their limited availability of financial and human resources and high dependence on overseas production in their business. In light of these findings, we conclude that countries interested in hosting FDI have to provide a very attractive business environment.