Impact of foreign direct investment on economic growth in Vietnam

Abstract

This study was conducted to determine the impact of foreign direct investment on economic growth in Vietnam. The dataset used in this study was collected from the Statistical Yearbook of the General Statistics Office of Vietnam (GSO, 2014, 2017, 2019). Data is taken from 63 provinces/cities in Vietnam in the period from 2010 to 2019 to examine the impact of FDI on growth in the last 10 years. The study uses quantitative research methods to assess the impact of factors on economic growth. Research results show that the variable FDI has a positive impact on economic growth in the short and long run. In the three economic sectors considered, FDI has a positive impact on the state sector and the foreign invested sector in the short and long term. In the non-state sector, FDI only has a positive effect in the short term, but no long-term effect is found in this sector. Besides, the export variable and the 1-year lagged variable of the dependent variable have the effect of increasing the economic growth, especially export is the factor that has the strongest influence on growth. Lower inflation will cause economic growth to increase. In addition, the human capital variable does not affect economic growth in general, but when considering each sector human capital has both positive and negative effects on economic growth.