FDI Determinants in Vietnam: Gravity Model Approach

This paper uses the gravity model to examine a number of determinants affecting FDI attraction to Vietnam based on panel data from 10 biggest FDI partners of Vietnam for the period of 2005-2019. By using Pooled ordinary least square (OLS), random effect (RE) and fixed effect (FE) models, the empirical results show that the geographical distance, gross domestic product (GDP), gross domestic product per capita (GDP per capita), trade openness and labor costs significantly impact on FDI attraction. These results offer an insight to suggest some policy implications that will help promote more FDI inflows into Vietnam in the future.