Empirical Analysis On The Affect Between Vietnam’s Foreign Direct Investment And Economic Growth

In the background of economic globalization, International Direct Investment gradually becomes the most popular channel attracting foreign funds for developing countries, surpassing government aid and international financial market loans. FDI has brought about a series of economic effects, including capital, technology, human resources and employment, etc.. Attracting FDI is becoming one of the most important strategies that developing countries need to settle.As the main form of international capital flows, foreign direct investment (FDI) has been playing an increasingly important role in the world economy, especially in the economy of developing countries.In the mid-1980s, in the initial stages of the "reform and opening-up" policy, Viet Nam selecting strategic choice of positive integration into the world economy system and broad participation in economic globalization. More than20years vigorous measure to attract foreign direct investment has become Viet Nam’s external economic and trade activities.Different theories tried to explain how FDI helps to accelerate economic growth: the Neo-Classical growth theory indicated that FDI, as a sort of capital and external shock, can only accelerate economic growth in the short run; while the Endogenous growth theory emphasizes the effects of technological diffusion of FDI on long-run economic growth.In this paper, large numbers of data and graphs are used to analyze qualitatively the characteristics of FDI into Viet Nam including the amount, categories, original countries as well as the structure of regions and industries. The contributions of FDI on Viet Nam economy are also explored. This paper conducts an empirical analysis on the relationship between FDI and the general economy growth in Viet Nam. The results demonstrate that every1%of the increase of FDI can bring about0.221%of the growth in Viet Nam’s GDP; FDI makes34.43%contribution to the economic growth. This indicates that FDI has positive effects on the general economic growth.By ways of analyzing the existed Problems of utilizing inflow DFI in Vietnam through systematic and compile data, the thesis gives some rational advices and methods for making good use of inflow FDI later on in Vietnam.