Factors Affecting Investment Decisions of EU Investors in Vietnam

Dr Long Nguyen Tien

doi:10.47191/ijcsrr/v5-i2-18

Abstract

EU investors were present in 18 out of 21 important economic sectors, focusing on manufacturing and processing industry 36.3%, refining and petrochemical 11%, textiles and garments 6.94%, electronics 6.4%, food processing 5.6%, cars and means of transport 5.2%; production and distribution of electricity and gas 20.7%, real estate 11%, information and communication 6.6% (GSO, 2020); contributed significantly to Vietnam’s economic growth. On the basis of that, attracting FDI is a subjective activity of the investee, that is, the investee will perform activities affecting the factors of the investee to increase the attractiveness of the investor. foreign investor. Thus, in order to effectively attract FDI from EU investors into Vietnam associated with the characteristics of each investor, it is necessary to assess the degree of influence of factors on FDI attraction, which is also the factors affecting the decision of EU investors. This study uses an exploratory factor analysis (EFA) model to analyze the factors affecting the investment decisions of EU investors in Vietnam, thereby proposing solutions to enhance the attractiveness of EU investors effective FDI from the EU into Vietnam in the coming time.

Highlights

This study used the exploratory multiplier analysis (EFA) model to analyze the factors affecting the EU's Foreign Direct Investment (FDI) attraction to Vietnam through a regression model with the dependent variable being "The decision of investment from the EU” and 10 independent variables are 10 groups of factors converging from many observations, which are: (i) Strategic objectives of investors; (ii) Investor's capacity; (iii) Regional economic linkages; (iv) Trade agreements between the investing country and the recipient country; (v) The economic political - social stability of Vietnam; (vi) Infrastructure of Vietnam; (vii) Investment promotion policy; (viii) Purchasing power of the domestic market; (ix) Investment promotion activities; and (x) Development of supporting industries in Vietnam
To study the factors affecting the EU's investment decision in Vietnam, the author will analyze through the factors affecting the "Investment decision" of EU investors in Vietnam according to the model the following figure 1
Correlation between variables in the model: The results of the regression analysis show that, we find that the adjusted R2 is 0.828 (82.8%) => 82.8 % of the change in the dependent variable QDDTCEU is explained by 10 independent variables, showing the relationship between the variables in the QDDTCEU. models are closely related

Summary

INTRODUCTION

This study used the exploratory multiplier analysis (EFA) model to analyze the factors affecting the EU's FDI attraction to Vietnam through a regression model with the dependent variable being "The decision of investment from the EU” and 10 independent variables are 10 groups of factors converging from many observations, which are: (i) Strategic objectives of investors; (ii) Investor's capacity; (iii) Regional economic linkages; (iv) Trade agreements between the investing country and the recipient country; (v) The economic political - social stability of Vietnam; (vi) Infrastructure of Vietnam; (vii) Investment promotion policy; (viii) Purchasing power of the domestic market; (ix) Investment promotion activities; and (x) Development of supporting industries in Vietnam. The primary data source is collected by surveying EU foreign-invested enterprises that are investing in Vietnam by submitting a questionnaire. IDP theory (usually applied to study OFDI rather than IFDI, ie from the perspective of investors) or ownership theory, internalization theory (only considers factors of investors) investment) is incomplete and (ii) Dunning's OLI model is the most popular analysis tool on the determinants of FDI because this model is synthesized from different theories, so it is more general than other theories and can explain all forms of FDI and is associated with all economic sectors. The OLI model is suitable for the study of FDI movement because the model solves all three questions: Why is FDI implemented, in what form and where to implement FDI These are the most basic questions when researching investments. To study the factors affecting the EU's investment decision in Vietnam, the author will analyze through the factors affecting the "Investment decision" of EU investors in Vietnam according to the model the following figure 1

Policy to encourage foreign investment

Findings

CONCLUSION