TITLE:
Foreign Direct Investment (FDI) in Vietnam Economy
AUTHORS:
Bui Kieu Anh, Nguyen Quang Thai, Bui Trinh
KEYWORDS:
Domestic, Enterprise, FDI, GDP, GNI, Input-Output, Investment, Export, Im-port
JOURNAL NAME:
Theoretical Economics Letters,
Vol.9 No.4,
April
24,
2019
ABSTRACT:
Foreign Direct Investment has positive impacts on developing
economies, however without proper and effective policies in attracting and
management of foreign investment, there can be negative impacts as well. This
study attempts to provide a picture of foreign investment in Vietnam over the
past time. The main research method used in the article is statistics analysis
and Input-Output analysis method using data from Vietnam General Statistics
Office, along with some contemporary policy discussion. A comprehensive
statistical investigation shows that while FDI sector consistently accounts for
about 20% of Vietnam GDP since 1995, this sector is becoming dominating in
importing and exporting relatively to State and other non-State sectors.
Besides, policies exercised by the Government are both showing signs of unfair
treatment between FDI and domestic sectors and showing loopholes exploited by
FDI firms (such as tax avoidance and price transfer). From the Input-Ouput
analysis, we discovered that the sector which needs State investment the most—domestic
sector with highest spillover effects to income and lowest to import—is begin neglected in favor of FDI sectors. Consequently,
this has created a fragmented domestic economy that is assembly-based and not fully utilising its manufacturing potentials.
Some recommendations drawn from the study are: increase effectiveness of
policy in attracting and using foreign investments; ensure fairness in
treatment between foreign and domestic firms; create incentives to boost
domestic manufacturing; priorities foreign capitals which have positive
spillover effects and technology transfer.