THE AFFECT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH IN VIET NAM

Abstract

In Vietnam, foreign direct investment always accounts for a large proportion of the total investment capital of the society and plays an important role in promoting economic growth. In this study, we have used time series data and applied the vector autoregression model (VAR) to analyze the effect of FDI on economic growth in Vietnam in the period from 1988 to 2017. Data sources are collected from the World Bank, General Statistics Office of Vietnam. The results of the study show that foreign direct investment inflows positively impacted economic growth during the studied period. In addition, past GDP and FDI have affected present GDP with a maximum time lag of 3 years, which is also a new finding of this study compared to previous studies. From the above results, the paper presents some policy implications for attracting FDI in Vietnam in coming time.

Keywords: FDI, affect, economic growth, VAR, Vietnam.