Term-Structure of Foreign Direct Investment Into Vietnam Economy

The paper investigates the term structure of foreign direct investment into Vietnam economy by dividing the short-term, medium-term and long-term contribution on the domestic economic growth. The data is an annual sample of Vietnam economy over 2007-2021. The empirical evidence records that the foreign direct investment stimulates the domestic economic growth by promoting the net exports in the medium-term and by the capital accumulation process in the long-term. In the short-term, the foreign direct investment also provides the foreign currency, which affect directly the equilibrium foreign exchange rate. Therefore, the foreign direct investment is a crucial growth engine for the Vietnam economy. The evidence suggests that the foreign direct investment can be a priority for the public policy to enhance the domestic economic growth rate. Beside the domestic sector, including the state-owned firms and private firms, the foreign direct investment needs to be managed so that its contribution to domestic economic growth is maximized