Date Received: 02-07-2025
Date Published: 02-07-2025
##submissions.doi##: https://doi.org/10.31817/tckhnnvn.2013.11.1.
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TRADE LIBERALIZATION AND FOREIGN DIRECT INVESTMENT IN VIETNAM: A GRAVITY MODEL USING HAUSMAN - TAYLOR ESTIMATOR APPROACH
Keywords
FDI, FTA, WTO, Vietnam, impact, gravity model, Hausman-Taylor estimator
Abstract
Foreign direct 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 approximately USD 229,913.7 million. A gravity model constructed using the Hausman – Taylor (1981) estimator was applied to 1995 to 2011 panel data that included 18 of Vietnam’s major country partners and provided by Vietnam’s authorities and international organizations. The purpose was to reexamine the possible effect of trade liberalization under the WTO regime and various FTAs on FDI flows. The estimates were consistent in line with the prediction that the WTO exerted great impact on FDI flows to Vietnam. By contrast, there is no evidence that demonstrates convincingly that the various FTAs in which Vietnam has 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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