DETERMINANTS OF FOREIGN DIRECT INVESTMENT IN VIETNAM

Since the Vietnamese economic reforms in 1986, Vietnam’s economy has been among the fastest growing countries in ASEAN. Foreign direct investment (FDI) flows are an important factor helping economic growth and development in Vietnam. This paper explores factors that determine foreign direct investment in Vietnam from 1988 to 2005. The main results show that higher market size, GDP growth, openness to trade and better infrastructure development are factors attracting FDI inflows into Vietnam. However, at this stage of research, we have not found a strong relationship between FDI and human capital quality or the timing of joining ASEAN. More study is needed to gain a better understanding on this aspect. Key Words: foreign direct investment, determinants, Vietna