Gross Domestic Product and Foreign Direct Investment: Empirical Evidence from Vietnam

Abstract

Foreign direct investment contributes to stimulating sustainable economic growth of each country, but economic growth plays an important role in attracting foreign direct investment. The empirical method was employed on a secondary time series data set during the period 2003-2018 to determine the impact of gross domestic product at current prices on foreign direct investment in Vietnam using a linear approach. The empirical results find that the relationship between gross domestic product and foreign direct investment is a positive sign at 1% significant level. Moreover, the study also shows that business freedom index and investment freedom index has a positive effect on foreign direct investment at 5% significant level. Based on the findings, the article recommends that Vietnam continues to seek positive solutions to enhance the economic growth rate, continuation in investment and business liberalization.