¹Zhen YU, ²Boi To LUU

¹Professor, Institute for the U.S. and Canadian Economies, Department of World Economics, Wuhan University, China

²PhD student, Department of World Economics, Wuhan University, China

Foreign direct investment (FDI) is seen as a key element in fostering economic growth during the process of economic integration. Investors' investment decisions may be influenced by a variety of issues, including the discomfort brought on by lengthy Customs clearance processes, a lack of management transparency, or the challenge of delivering commodities. This study's primary goal is to determine whether trade facilitation (TF) throughout the years 2007 to 2019 played a role in luring foreign direct investment to Vietnam. Three components make up the TF impact: the infrastructure effect, the institutional effect, and the customs effect. According to the findings, enhancing these outcomes will boost FDI inflows into Vietnam's economic sectors. The cost and time spent processing the clearance documents serve as a proxy for the TF effect in the robustness check. The results are in line with early predictions that TF reforms may boost FDI inflows. Trade is made easier by reducing the time and expense of importing and exporting. FDI flows have expanded over time as a result of this making Vietnam's business environment more appealing.

Foreign direct investment; System Generalized Method of moments; trade facilitation

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Volume 05 Issue 08 August 2022

There is an Open Access article, distributed under the term of the Creative Commons Attribution – Non Commercial 4.0 International (CC BY-NC 4.0) (https://creativecommons.org/licenses/by-nc/4.0/), which permits remixing, adapting and building upon the work for non-commercial use, provided the original work is properly cited.