TRADE LIBERALIZATION AND FOREIGN DIRECT INVESTMENT IN VIETNAM: A GRAVITY MODEL USING HAUSMAN - TAYLORESTIMATOR APPROACH

Date Received: 07-01-2013

Date Accepted: 19-02-2013

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Issue: Vol. 11 No. 1 (2013)

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KINH TẾ XÃ HỘI VÀ PHÁT TRIỂN NÔNG THÔN

How to Cite:

Chi Cuong , H., Ngoc, D., Linh, D., & Mai, B. (2024). TRADE LIBERALIZATION AND FOREIGN DIRECT INVESTMENT IN VIETNAM: A GRAVITY MODEL USING HAUSMAN - TAYLORESTIMATOR APPROACH. Vietnam Journal of Agricultural Sciences, 11(1), 85–96. https://vie.vjas.vn/index.php/vjasvn/article/view/1609

TRADE LIBERALIZATION AND FOREIGN DIRECT INVESTMENT IN VIETNAM: A GRAVITY MODEL USING HAUSMAN - TAYLORESTIMATOR APPROACH

Hoang Chi Cuong 1, 2, 3, 4, 5 , Do Thi Bich Ngoc 6 , Dang Huyen Linh 7 , Bui Thi Phuong Mai 6

  • 1 Waseda University, Tokyo, Japan
  • 2 Hai Phong Private University, Hai Phong, Vietnam
  • 3 GSAPS, WasedaUniversity, Tokyo, Japan, Doctoral Candidate
  • 4 Graduate School of Asia - Pacific Studies, Waseda University, Tokyo, Japan
  • 5 Graduate school of Asia - Pacific Studies
  • 6 Hai Phong Private University
  • 7 Vietnam Ministry of Planning and Investment

    • Keywords

    WTO, FTA, Vietnam, impact, gravity model, Hausman-Taylor estimator, FDI

    Abstract


    Foreigndirect investment (FDI) plays a crucial role in the process of development for Vietnam. Over the two decades of Renovation, a large number of FDI capital flowed into the country, especially after joining the WTO in 2007, an amount reaching up to approximatelyUSD 229,913.7 million. Agravity model constructed using the Hausman – Taylor(1981) estimatorwasapplied to 1995 to 2011panel data that included18 of Vietnam’s major country partnersandprovided by Vietnam’s authorities and international organizations. Thepurposewasto reexamine the possible effect of trade liberalization under the WTO regime and various FTAs on FDI flows. The estimates wereconsistent in line with the prediction that the WTO exerted great impact onFDI flows to Vietnam. By contrast, there is no evidence that demonstrates convincingly that the various FTAs in which Vietnamhas signed/joined recently, increased FDI capital into the country. The paper also proposes recommendations for attracting FDI and using FDI capital more effectively.

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