Benefits of EVIPA for Vietnam: Perspective from national competitiveness

Abstract

This discussion paper aims to present the view on the possibility of benefits that Vietnam receives from the Vietnam - European Union Investment Protection Agreement (EVIPA). The paper opens by sketching an optimistic expectation of the benefits of EVIPA from recounting statements by experts and country administrators in the mainstream news. Next, the paper reflects the current situation of foreign direct investment (FDI) flows between the two sides through archived data; at the same time, it provides arguments to explain why FDI flows have not been able to increase significantly after EVIPA. However, attracting FDI is only a premise, benefiting from FDI is the key point. Using the World Economic Forum's Global Competitiveness Index data in 2019 to compare the national competitiveness of Vietnam and 27 EU member states, the paper points out that Vietnam's national competitiveness is both low and the distance is too far from the EU. With too few FDI flows plus low national competitiveness, it is difficult for Vietnam to enjoy as many benefits from EVIPA as expected. The article emphasizes the awareness of the importance of enhancing national competitiveness in order to enhance absorption capacity, thus, Vietnam can benefit from EVIPA.