Interaction effects between FDI growth and institutional environment. a case of Vietnam, 2008 - 2011

Abstract

This thesis analyzes the interaction effects between FDI growth and institutional environment in Vietnam in the period of 2008 – 2011. Detailed data of FDI, some traditional FDI-related factors and institutional environment are consolidated from the Provincial Competitiveness Index (PCI) Reports of Vietnamese Chamber of Commerce and Industry (VCCI) and the U.S. Agency for International Development (USAID) and from Statistical Yearbooks of General Statistics Office of Vietnam. Different functional forms are employed using fix-effects technique to identify the factors affecting FDI flow into provinces in Vietnam. The major results of the thesis show that there exists a significant relationship between FDI inflow and institutional environment which is proxied by nine sub-indices of PCI Reports. Although not all of those indices are significantly related to FDI in the period 2008-2011, the PCI Reports are becoming more and more popular and a trustworthy reference source for foreign investors prior to investing into Vietnam.