Difference in macro indicators and culture between home and host countries - the effects on FDI inflow of Vietnam

Abstract:

Foreign direct investment (FDI) plays an important role in promoting the development of emerging economies. This study evaluates the impact of differences in macroeconomic factors, institutional quality and culture between the country deploying FDI and Vietnam on FDI inflow of Vietnam. The data sample includes 32 main partners deploying FDI in Vietnam in the period from 2002 to 2021. The author simultaneously uses Random effect, Ordinal least square regression with Driscoll and Kraay and Generalized Method of Moments (GMM) regression method on the panel data sample to ensure the rigor of the research results. The research contributes to the FDI empirical studies by showing the heterogeneities between the home country and Vietnam such as cultural distance, differences in corruption level, economic freedom, GDP per capita and population size impact the inflow FDI of Vietnam. The results have important implications for Vietnam government to develop appropriate policies attracting FDI in the context of globalization.