Abstract
Foreign direct investment (FDI) is an essential factor for economic growth, and the attraction of FDI inflow is a solution to foster economic growth in developing countries. Literature is well documented that FDI is determined by many factors, of which foreign aid has a controversial impact on FDI depending on complementary or substitute effects between these two capital flows. This study investigates the impacts of foreign aid on FDI and whether this impact is different cross-province with hetero-quality of governance. Using the fixed-effect and dynamic GMM estimation models for balanced panel data during 2006-2017, this paper finds a negative impact of foreign aid on FDI at the provincial level, but the effect is different cross-province with different proxies of the quality of governance. These empirical results shed light on the foreign aid allocation policies and management to increase the attractiveness of FDI inflow in Vietnam.
Keywords:
Jel Code:
Article Details
- Year: 2021
- Volume: 42
- Issue: 4
- Pages: 127 - 146
- Accepted: 21.05.2021
-
DOI:
https://doi.org/10.5281/zenodo.17054460 -
Full Text (PDF)
2 Views 2 Downloads
How to Cite?
Do Thi Ngoc Lan, Le Quang Canh (2021). Foreign Aid, Governance, and Foreign Direct Investment in Vietnam: A dynamic GMM Analysis. Journal of Economic Cooperation and Development, 42(4), 127-146. https://doi.org/10.5281/zenodo.17054460
