Attracting foreign direct investment: a critical analysis of Vietnam's performance

Le, T 2015, Attracting foreign direct investment: a critical analysis of Vietnam's performance, Doctor of Philosophy (PhD), Economics, Finance and Marketing, RMIT University.

Document type: Thesis
Collection: Theses

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Title Attracting foreign direct investment: a critical analysis of Vietnam's performance
Author(s) Le, T
Year 2015
Abstract Developing government policies and a business environment aimed at boosting foreign direct investment (FDI) and attaining a certain pattern and quality of FDI inflows has not always produced the desired outcomes. In a developing and transition economy such as Vietnam, where government resources are limited and the setting of FDI-related policies often involves public investment or tax concessions, the question of the efficacy of such policies is not a trivial matter. This thesis aims to provide robust evidence-based analysis and explanations to uncover what drives FDI inflows in Vietnam. It analyses and assesses the effectiveness of Vietnam’s policies and location factors in attracting FDI to a country which had practically no FDI inflow prior to the launch of its economic reform in the mid-1980s.

In addressing the key research question of how well Vietnam has performed in attracting FDI, this study examines FDI location factors at both provincial and national levels to provide a comprehensive understanding of Vietnam’s performance as a FDI destination. The findings of this study reveal that economic factors and commercial imperatives are more powerful than the investment incentives offered by the Vietnamese government in attracting FDI. At the provincial level, market size, infrastructure development, special economic zones, and international sea ports are found to be the key drivers in attracting FDI; at the national level, the driving FDI factors are market size, trade openness, labour quality, and exchange rate uncertainty. Although Vietnam’s effort to develop its policy framework and to introduce policies has been important in attracting FDI inflows, the outcomes are not always satisfactory from the perspective of the government’s developmental goals. This is because Vietnam does not have the appropriate economic conditions and capacity to support the government policies to attract the desired FDI composition and quality. Although Vietnam has improved its economic environment to attract inward FDI since the country’s economic reform, as a member of ASEAN, its economic conditions and investment environment are, on average, weaker than those of the nine other members.

This research makes an original contribution to the validation of some major elements of FDI theories, while at the same time providing new evidence and insights for the future development of FDI policies in Vietnam. Based on the findings in this research, it may be more productive for government policies to increase the focus on economic reform and development to improve the competitiveness of the country’s FDI location advantages.
Degree Doctor of Philosophy (PhD)
Institution RMIT University
School, Department or Centre Economics, Finance and Marketing
Keyword(s) Vietnam
FDI inflows
FDI location factors
FDI policies
FDI attraction
ASEAN FDI location factors
Foreign direct investment
Vietnam FDI location factors
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Created: Wed, 19 Aug 2015, 10:20:02 EST by Denise Paciocco
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