FDI in Vietnam: An Empirical Study of an Economy in Transition

Abstract

DI has grown rapidly in recent years in an increasingly integrated global economy until the recent financial and economic crisis spread globally. The emerging former Soviet-bloc countries of Central and Eastern Europe, Southeast Asia, China, and India have transitioned to market economies during the last twenty years stimulating global FDI flows which have increased more rapidly than any other international economic or financial transactions. Global FDI inflows in 1985 were estimated to be $53 billion, however, by 1990 aggregate FDI had reached $234 billion and data for 2008 indicate global FDI of $1.8 trillion i . Economic restructuring and liberalization in the major recipient and investing countries, global capital markets, and continued economic transition in emerging command economies strongly influenced investor behavior and strategy. Economic growth has been accompanied by greater political stability and the building of democratic and market institutions in many emerging economies. The acceleration of FDI through 2008 has been fueled by the increasing globalization of transnational organizations of their production networks, the policy liberalization of host countries regarding FDI in service industries and real estate growth in mergers and acquisitions, and the expanding investment opportunities in emerging markets and newly privatized sectors in both industrialized and developing countries. F