Foreign Direct Investment In Vietnam Research Articles

Political Risk Impacts on Foreign Direct Investment in Vietnam

Political Risk Impacts on Foreign Direct Investment in Vietnam

The Effects of Geopolitical Risk on Foreign Direct Investment in a Transition Economy: Evidence from Vietnam

Foreign direct investment (FDI) is a key driver of economic development of both developed and developing countries. Understanding and having insights into the factors that motivate increased FDI arevery important for both academics and policy makers. A key factor that multinationals incorporate in their decisions on FDI is geopolitical risk (GPR). Therefore, this study is devotedto investigating the short-term and long-term effects of GPR on FDI in Vietnam. Data used in this study are the yearly geopolitical risk index, FDI, and other control variables covering the period from 1986 to 2021. Using the autoregressive distributed lag (ARDL) bounds testing approach, the empirical results confirm that geopolitical risk (GPR) has a significantly negative effect on FDI in Vietnam in the longterm. Specifically, in the longterm, 1 percent increase in the GPR index is associated with 5.7983 percent decrease in Vietnam’s FDI. In addition, the results derived from the ARDL model indicate that in the shortterm, GPR has a significantly positive effect on the FDI for the one-year lag, meaning that an increase in the GPR index leads to an increase in FDI. Moreover, the results derived from the error correction model (ECM) indicate that 42.89% of the disequilibria from the previous year are converged and corrected back to the long-run equilibrium in the current year. Based on the findings, some policy implications are drawn for policymakers to mitigate the negative effects of GPR on FDI.

STRENGTHENING ECONOMIC TIES: THE IMPACT AND POTENTIAL OF SOUTH KOREAN FOREIGN DIRECT INVESTMENT IN VIETNAM

Economic cooperation has been a key pillar of the relationship between South Korea and Vietnam, with the two nations joining numerous bilateral and multilateral cooperation agreements. Theeconomic ties between the two contries have been strengthened significantly through the Korea-Vietnam Free Trade Agreement (KVFTA), which hasprovided a framework for promoting economic cooperation, trade, and investment, fostering stronger and more effective mutual relations between the two nations. As of 2022, Korea's investment scale in Vietnam has reached approximately 80 billion USD, fueling Vietnam's economic growth, employment opportunities, and technology transfers. The paper examines the legal basic for promotingforeign direct investment in Vietnam and delves into the patterns of Korea's FDI in Vietnam,highlighting the expected expansion of Korean firms' investments. The research assesses the potential opportunities and challenges associated with South Korean foreign direct investment in Vietnam. Finally, the study offers several recommendations aimed at mitigating negative outcomes while maximizing the positive impacts of this bilateral relationship within the current context.

Khung pháp lý chống chuyển giá các doanh nghiệp đầu tư nước ngoài tại tỉnh Bà Rịa - Vũng Tàu

Foreign direct investment (FDI) enterprises are increasingly asserting their important role in Vietnam’s economy. In addition to their contributions, FDI enterprises also cause difficulties in tax administration of the Government, through sophisticated and complicated transfer pricing acts between territories in order to minimize tax obligations. Therefore, the study analyzes the transfer pricing situation at FDI enterprises in Ba Ria - Vung Tau province, the top 10 provinces attracting FDI in Vietnam. The article analyzes the adjustments in the legal framework against transfer pricing activities in Vietnam since 2016 and specific application cases in Ba Ria - Vung Tau province. From there, the article proposes recommendations to strengthen the legal framework against transfer pricing in the future, such as adding transfer pricing issues to relevant Laws, determining tax on turnover, and unifying the principle of determining market prices for associated transactions.

Assessment of Impacts of Inward and Outward FDIs on Environmental Protection in Vietnam

Considering two theories of Halo and Haven and annual data from 1994 to 2021 for the country of Vietnam, this paper has tried to consider two types of foreign direct investment (to Vietnam from abroad and from Vietnam to abroad) to study the impact factor of investment on carbon dioxide emissions in this country. The significant findings reveal that FDI (Foreign Direct Investment), both inward and outward, is an efficient factor in mitigating carbon emissions in the short term in Vietnam. The enhancements in the inward and outward flows of FDI in Vietnam will likely lead to a reduction in carbon emission increase which is in line with the environmental protection policy. In addition, it confirms the Halo pollution hypothesis in Vietnam, meaning that the Vietnamese government can mitigate CO2 emissions by improving FDI flows (both inward and outward).

The Relationship among Exports, Foreign Direct Investment, and Economic Growth in Vietnam - A VAR Approach

This study investigates the causality among export, foreign direct investment (FDI) inflows and economic growth in Vietnam using quarterly time-series data from 2000Q1 to 2017Q4. The vector autoregression (VAR) model is employed to explore the relationship among variables in the long term as well as the short term. The results from the Johansen Cointegration test indicated that there was no long-term equilibrium nexus existing between them, so the VAR model would be qualified to apply for the study. Findings from the Granger causality test show that in the short term, there was a bilateral relationship between GDP and Exports, whereas GDP-FDI and Export-FDI are one-way relationships since both GDP and Exports were found by Granger to cause an increase in FDI in Vietnam but not vice versa. The findings of the causality relationship from GDP to exports and FDI and from exports to FDI in the short term imply that promotions in Vietnam’s economic growth will boost export activities as well as attract more inward FDI to the country. The results also indicate a current trend of Vietnam’s FDI being not really sustainable, as many FDI projects invested in Vietnam take advantage of abundant labor resources, low skills and cheap labor costs, as well as the origin of goods from Vietnam for export, as a result, not significantly contributing to the economic development.

How Does the Competitiveness Index Promote Foreign Direct Investment at the Provincial Level in Vietnam? An Integrated Grey Delphi–DEA Model Approach

Foreign direct investment (FDI) is an important factor in building a strong economy for a country, particularly in developing and emerging markets. Both domestic enterprises and policy makers have been motivated to attract FDI for the benefits of FDI, such as technological transfers, spillover benefits, and rising competition. There is a need for a functional model to assess how the competitive index affects FDI attractiveness. Therefore, in this study, the authors use an integrated model of Grey Delphi, the Data Envelopment Analysis Super Slack-Based Measure Model (DEA–Super SBM), and the Malmquist Model (DEA–Malmquist) to evaluate the FDI attractiveness of Vietnamese provinces from 2017 to 2021. Firstly, ten critical dimensions of the provincial competitive index (PCI) affecting the number of FDI by cases and amount of FDI capital were validated via the Grey Delphi method. Secondly, the Super-SBM model is applied to assess the FDI efficiency of 63 provinces in Vietnam from 2017 to 2021. Then, the DEA–Malmquist model is employed to analyze the total change in the productivity of 63 provinces’ FDI performance in Vietnam. The findings of this study revealed that the efficiency of FDI in Vietnam’s provinces is relatively low, and there is a significant variation in the attractiveness of FDI among the provinces. This study can provide valuable insights for policy makers and other stakeholders in developing effective strategies to attract FDI and foster economic development.

Thu hút vốn đầu tư trực tiếp nước ngoài xanh tại Việt Nam

Foreign Direct Investment (FDI) has been considered as an important factor promoting economic growth and accomplish development directions in Vietnam. In recent years, while global economy tends to achieve the Sustainable Development Goals and the commitments of Paris Climate Agreement, the influence of FDI on environment has been more and more concerned. In fact, not all of FDI projects have positive impacts on environment of the host country. The problem is how FDI projects can achieve both goals: bringing economic and social benefits and ensuring the environment issues. Attracting green FDI may be the answer for the above question, however, in Vietnam, attracting green FDI still have limitations. This paper aims to clarify the need of attracting green FDI in developing countries, analyse obstacles in attracting green FDI in Vietnam and propose solutions to enhance that kind of capital attraction in the future.

Foreign Direct Investment in Vietnam: A Comparison of Forecasting Performance

In recent years, FDI has made a significant contribution to the economic development of Vietnam, especially in the manufacturing and processing sectors. To forecast the FDI inflow into Vietnam in the future, a research team used indicators such as the number of investment projects, the total registered capital, and the total implemented capital. These indicators were collected from the General Statistics Office to forecast the level of FDI attraction in Vietnam in the coming years. This study includes annual data on the number of FDI investment projects in Vietnam collected from 2000 to 2022. The forecasting methods used in this study include the Autoregressive Integrated Moving Average (ARIMA) model, additive time series forecasting, Holt-Winters forecasting, and linear regression forecasting using Mini-tab 18.0 software. After analyzing the data on the number of FDI investment projects in Vietnam from 2000 to 2023, the research team collected results and compared the accuracy of the forecasting models based on three metrics calculated from the forecasting models, which are MAPE, MAD, and MSE. The comparison of the metrics showed that the Time Series method is the most suitable forecasting method with the lowest MAPE and MAD values compared to the other three models, while the MSE value of the Time Series model is only higher than the ARIMA model and still lower than the other two models. With the comparison results of the forecasting models, the study found a suitable forecasting model for each time cycle.

Labor and infrastructure factors affecting provincial distribution of foreign direct investment in Vietnam

The study assesses the influence of labor and infrastructure on attracting foreign direct investment (FDI) to the provinces of Vietnam in the period of 2009 - 2020. Research results from linear regression model and random effects estimation method have confirmed the importance of human capital and infrastructure in attracting FDI. The labor-related aspects in this study confirm that tendency of MNEs focusing on labor-intensive industries in Vietnam has not changed. The study also provides policy implications as building and improving the quality of infrastructure with the main goal of reducing inequality in attracting more FDI inflows to Vietnam's provinces in the near future. In addition, the workforce needs to have a plan to prepare themselves with solid knowledge and necessary skills to hone and absorb the know-how transferred from foreign investment companies, to have an ability to contribute to the development of the quality of our country's human resources.

Examining the Correlation among Economic Development, Foreign Direct Investment, and CO2 Emissions by Utilizing the VECM Model—Empirical Study in Vietnam

From 1990 to 2019, Vietnam entered a period of economic growth, attracting foreign investment. However, during this period, CO2 emissions also increased significantly. This paper will examine the short- and long-term relations of Vietnam’s relationship among FDI, economic growth, and CO2 emissions based on the data on CO2, GDP, and FDI of Vietnam in 1990–2019. This article uses the VECM model to test the effect among variables. Research results identify an impact and causal correlation among CO2 emissions and economic growth and foreign direct investment in Vietnam. Research results show a long-term relationship between CO2 emissions, GDP, and FDI. The authors did not find a short-run relationship between the above variables. Assessing impacts of CO2 emissions on economic growth and foreign direct investment will help policymakers make reasonable policies to balance the increase in foreign investment capital and economic growth and reduce CO2 to achieve the commitment in COP26.

Does foreign investment crowd in domestic investment? Evidence from Vietnam

This paper examines the linkages between foreign and domestic investment at sector level in a transitional economy. Using System Generalized Method of Moments estimation on a strong balanced dataset covering all sectors across the country, our results consistently suggest that foreign direct investment in Vietnam positively motivates domestic private investment in the same sector. Examination of the linkages finds evidence of crowding-in effects from foreign investment on domestic private investment in downstream sectors that have strong linkages with foreign investment in upstream sectors. No significant impact is found in upstream domestic investment that has linkages with foreign investment in downstream sectors. State-owned investment and joint-venture investment by foreign and domestic investors have a generally negative effect on the investment behavior of private investors. Domestic private investment in export-oriented sectors appears to be more responsive to the presence of foreign investment in both upstream and downstream sectors through vertical linkages. • This paper examines the linkages between foreign and domestic investment at sector level in Vietnam over the period 2010–2015. • Our results consistently suggest that foreign direct investment in Vietnam positively motivates domestic private investment in the same sector. • In particularly, we find evidence of crowding-in effects from foreign investment to domestic private investment in the downstream sectors that have strong linkages with foreign investment in upstream sectors. • There is no significant impact found in terms of upstream domestic investment that has linkages with foreign investment in downstream sectors. State-owned investment and joint-venture investment involving foreign and domestic investors have a generally negative impact on the investing behavior of private investors. • Domestic private investment in export-oriented sectors appears to be more responsive to the presence of foreign investment in both upstream and downstream sectors through vertical linkages.

해외직접투자와 기술수출에 관한 연구

The paper puts an in-depth study on Korea's technology trade competitiveness with Vietnam, Korea's No. 1 foreign direct investment and the No.1 technology trade surplus country. In addition, it investigates the impact on technology exports according to the type of investment and the purpose of investment in Vietnam when making foreign direct investments. The trade specialization index was used as an analysis tool to analyze the technology competitiveness of specific industries, and multiple regression analysis was applied to examine the causal relationship between foreign direct investment and technology exports by its type and purpose.
 Firstly, a result of the analysis of the trade specialization index reveals that Korea's technology competitiveness with Vietnam was high across all industry sectors. Still, the technological competitiveness of the apparel, accessories, and fur industries is weakening every year.
 Also, Korea's technological competitiveness with Vietnam continues to decline in non-metallic minerals and basic etals from the material industry, which is the basis for high-tech sectors such as the semiconductor industry. On the other hand, a result of regression analysis suggests that the technology exports from Korea have increased in the form of joint investment and decreased when Korean companies invested with the aim of cost reduction when entering the Vietnamese market.
 This study identifies Korea's strong technology competitiveness with Vietnam in each specific industry, but the competitiveness has been weakening in some industries like apparel and material industries. It is also significant in that the impact on domestic technology exports varies depending on the purpose and type of foreign direct investment in Vietnam. It affects Korea's technology exports accordingly.

The Effect of the COVID-19 Pandemic on Inward FDI in Vietnam

Using monthly inward foreign direct investment (FDI) data for the period from January 2020 to September 2021, our study aims to investigate how the COVID-19 burden (cases and deaths) and policy responses of Vietnam and 40 investment partners affected Vietnam’s FDI attraction. Estimates for the baseline models as well as for different types of income levels show that Vietnam’s COVID-19 burden negatively affects its inward FDI, while no evidence reveals the effect of investment partners’ COVID-19 burden. We find that Vietnam’s COVID-19 cases negatively affect its inward FDI from the European region, while no evidence reveals an effect from the Asian region. When including policy responses in the estimation, we find a disadvantageous impact of investment partners’ COVID-19 cases and deaths as well as Vietnam’s COVID-19 deaths on Vietnam’s inward FDI. In general, the effects of COVID-19 cases are significantly lower than those of COVID-19 deaths. Estimates show that stringent measures in Vietnam and investment partners negatively affect FDI flows into Vietnam, while containment and health measures have a positive effect. The study suggests that efforts should focus on reducing the number of COVID-19 deaths rather than the number of COVID-19 cases, minimizing the application of stringency measures by Vietnam and investment partners, applying health methods, and expanding trade agreements networks.

Impact of the Institution on Foreign Direct Investment in Economic Transition

Foreign direct investment plays an important role in the economic development of developing countries. One of the factors that investors consider when deciding to invest in a country is the institutional factor. Therefore, this study is conducted to determine the relationship between institutions and foreign direct investment in Vietnam. Research data is panel data from 63 provinces/cities of Vietnam for 2012-2015 used to test the hypothesis. The fixed impact assessment model (F.E.M.) and IV-GMM allowed the exact causal relationship of these factors to be determined. The results show a positive impact from institutional factors on FDI attraction in Vietnam. Research results also show that R&D research also helps increase FDI attraction into Vietnam significantly, and the accountability factor is the most important factor for investment decisions of FDI owners. In addition, the study also examines in detail the institutional distribution indicators that affect FDI. The study shows a significant relationship between institutions and FDI attraction to Vietnam. From this result, some policy implications are also given to improve the ability to attract FDI based on institutional policy.

Analysis of Foreign Direct Investment Attraction in Vietnam Real Estate in the Pandemic Condition

The economy of Vietnam is a socialist-oriented emerging market that heavily depends on agriculture, tourism, raw material exports, and foreign direct investment. Vietnam is industrializing and modernizing from a low starting point with weak and small economic resources. This is one of the huge obstacles to the development of Vietnam’s economy. Therefore, mobilizing and leveraging foreign direct investment are very important. In the COVID-19 pandemic, many large international corporations and enterprises are looking for investment opportunities to diversify their supply chains and limit their overdependence on the Chinese market. Vietnam has emerged as one of the brightest candidates for this capital flow due to its success in epidemic prevention. While foreign direct investment has been declining globally, foreign direct investment in Vietnam has rebounded in the second quarter of 2020 and has been on an upward trend. The real estate market remained an active segment in the third quarter of 2020. This article uses comparison, logical and statistical analysis methods to study foreign direct investment in real estate in Vietnam. The contribution analyzes the factors that influenced the desire of foreign investors to invest in the Vietnamese real estate market, based on publicly available data sources of the Foreign Investment Agency, Vietnam Ministry of Planning and Investment; and the General Statistics Office of Vietnam. Solutions at the state level to stimulate investment in Vietnam are proposed.

The role of FDI in Vietnam's economic development

Since Vietnam joined the World Trade Organization (WTO) in 2007, foreign direct investment (FDI) into Vietnam has increased sharply and has become one of the important sources of capital for the economic development of the country. However, apart from the positive aspects that FDI brought, there were also many negative aspects affecting the economic, political, social, and environmental fields. By analyzing the current situation, role, and limitations of FDI in Vietnam's economic development, the study shows that FDI inflows into Vietnam had positive changes in the period 2010 - 2020. During the research, the analytical data was collected from secondary data from the yearbook of the General Statistics Office and the reports of the Foreign Investment Department - Ministry of Planning and Investment, using the descriptive statistics, synthesis, and analysis to analyze data to describe the effects and qualitative relationship between FDI and economic development in Vietnam. The research results show that in the period 2010-2020, FDI capital continuously increased in total registered capital and realized capital; the proportion of FDI contribution to GDP also increased gradually over the years, however, there was an imbalance between registered capital and realized capital, and the contribution of FDI to GDP was still limited. At the same time, the results also show that the capital of FDI invested in Vietnam and many economic sectors primarily stems from Asian countries while the number of investors in developed countries such as Europe and the Americas is yet inconsiderable, and FDI mainly focuses on processing and manufacturing industries. Based on the research results of the article, a number of solutions are proposed to help Vietnam attract more foreign-invested projects, contributing to promoting Vietnam's economic development in the coming time.

The uncertainty and foreign direct investment in the context of the COVID-19 pandemic of Vietnam

During the 1980s, international resource mobility including worldwide capital movement was liberalized. Since then, Foreign Direct Investment (FDI) has continuously grown and expanded worldwide. The emergence of the COVID-19 pandemic and its large-scale outbreak caused significant economic, social and political disruption. In particular, the economic impacts of the pandemic have caused income reduction, increase in unemployment, decrease in aggregate demand, increase in import and export costs and decrease in international trade on a large scale around the world. Since then, the global economic growth has dropped sharply, affecting the trend of global FDI flows, including FDI inflows into Vietnam. Multinational corporations have diverted investments to many countries in order to diversify their supply sources and avoid the negative impacts of trade sanctions and supply chain disruptions. The study aims to present the shifting situation of global FDI flows and FDI in Vietnam in the context of the COVID-19 pandemic; and analyze the current context of the world economic uncertainty (WUI), the world pandemic uncertainty (WPUI), and FDI inflows into Vietnam. From there, the study proposes some recommendations and policy implications to reduce the negative impact of WUI and WPUI due to the global COVID-19 pandemic on the FDI flows into Vietnam.

The impact of energy consumption to environmental sustainability: an extension of foreign direct investment induce pollution in Vietnam

PurposeAccording to the crusade of the United Nations sustainable development goals (SDGs-6, 7,8,12 and 13) that addressed pertinent issues around, clean access to water, access to energy, responsible consumption and climate change mitigation alongside, respectively, Paris Kyoto Protocol agreement of mitigation of climate changes issues of vision 2030.Design/methodology/approachThis purpose of this study aimed to assess the Environmental Kuznets Curve hypothesis following the ecological footprint perspective with a data set covering the period 1995–2018. It is well-established that anthropogenic human activities are the root cause of environmental deterioration. To this end, the current study is fitted in a multivariate framework to ameliorate for omitted variable bias for the data set from 1995–2018 on a quarterly frequency using autoregressive distributive lag methodology. Subsequently, the stationarity status of the study underlines series were examined with a conventional unit root test and the Pesaran’s bounds test for cointegration analysis.FindingsEmpirical evidence from the bounds test to cointegration traces the co-integration relationship between ecological footprint, conventional energy use, foreign direct investment, international tourism arrival and water resources over the sampled period. The study, in the long run, affirms the N-shaped relationship between ecological footprint and foreign direct investment in Vietnam. Additionally, the present study validates the hypothesis of energy consumption-induced pollution emissions. The relationship between international tourism arrival and quality of the environment is statistically positive in both the short-run and long-run, as 1% in international tourism arrival worsens the quality of the environment by 0.45% and 0.4% in the short-run and long-run, respectively. Interestingly, water resource's major environmental issues that have plagued the Vietnam economy are inversely related to ecological footprint. Based on findings, Vietnamese policymakers may need to consider drafting appropriate environmental policies to tackle global warming while concurrently boosting economic development.Originality/valueThe present study focuses on Vietnam on the determinant of environmental quality measured by a broader indicator (ecological footprint). It is well-established that anthropogenic human activities are the root cause of environmental deterioration. The present study claims to distinct from previous literature in two-folds, namely, in terms of scope. Vietnam holds a very interesting energy mix and environmental dynamics, which has been ignored in the literature. Second, we argue to be the first based on our survey to explore the theme by incorporation of water resources and foreign direct investment intensification in the conventional pollution determinant model. This is in a bid to highlights the policy blueprint for the country (Vietnam), which is currently plagued with high pollution issues and the region at large.

Determinants of linkages between foreign direct investment firms and domestic firms in Vietnam

Foreign direct investment (FDI) is an important sector of many developing economies in general and of Vietnam in particular. In Vietnam, the FDI sector contributed up to 27.7% of the average economic growth rate of 6.0% per year from 2010 to 2018. Besides this contribution, operations of FDI in Vietnam reveal many limitations, the most noticeable of which is the weak linkage between FDI and Vietnamese firms. This article examines determinants of FDI-domestic firms linkage in Vietnam. This research looks at all three types of linkage, including horizontal linkage, vertical linkage, and supply-backward linkage. Factors that have a positive impact on linkages are provincial economic growth, firms’ technology level, regional factors, being located in industrial zones, and operating in the manufacturing sector. Macroeconomic instability has a negative impact on linkage. The quality of economic governance, as measured by the Provincial Competitiveness Index, is important for attracting FDI, but does not affect linkages.