Examine Trade Facilitation Effects on Foreign Investment in Vietnam's Economic Sectors

Abstract

Foreign direct investment (FDI) is seen as a key element in fostering economic growth during the process of economic integration. Investors' investment decisions may be influenced by a variety of issues, including the discomfort brought on by lengthy Customs clearance processes, a lack of management transparency, or the challenge of delivering commodities. This study's primary goal is to determine whether trade facilitation (TF) throughout the years 2007 to 2019 played a role in luring foreign direct investment to Vietnam. Three components make up the TF impact: the infrastructure effect, the institutional effect, and the customs effect. According to the findings, enhancing these outcomes will boost FDI inflows into Vietnam's economic sectors. The cost and time spent processing the clearance documents serve as a proxy for the TF effect in the robustness check. The results are in line with early predictions that TF reforms may boost FDI inflows. Trade is made easier by reducing the time and expense of importing and exporting. FDI flows have expanded over time as a result of this making Vietnam's business environment more appealing.