Abstract
ABSTRACT Foreign direct investment (FDI) remains an essential catalyst for trade liberalization and economic growth in both developing and developed countries. This study investigates the impact of inward FDI on foreign trade in Vietnam for the period 1991-2016 by applying time-series analysis techniques. The empirical findings show that FDI inflows, gross domestic product (GDP) per capita, and secondary education as a proxy for human capital have positive impacts on foreign trade whereas exchange rate and inflation rate have insignificant effects on foreign trade. Ultimately, this research suggests that Vietnamese government should focus on strengthening domestic industries in associated with the FDI policy framework as well as implement policies that favor the foreign trade, such as reducing trade barriers to encourage more inward FDI into Vietnam to enhance higher economic growth. Keywords Foreign direct investment, foreign trade, time-series analysis, Vietnam.
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