A theory that provides a three-tiered framework (Ownership, Location, Internalization) for a company to follow when determining if it is beneficial to pursue direct foreign investment.
Published in Chapter:
Locational Determinants of Foreign Direct Investment in the Vietnamese Economy
Ngoc Le (Northumbria University, UK), Xiaoqing Li (Brunel University London, UK), and Andrey Yukhanaev (Northumbria University, UK)
Copyright: © 2015
|Pages: 36
DOI: 10.4018/978-1-4666-6551-4.ch001
Abstract
This chapter investigates the determinants of inward Foreign Direct Investment (FDI) in the Vietnamese economy and their connection to the rapid economic growth the country has experienced. Using the concepts drawn from the extant Ownership-Location-Internalization (OLI) paradigm and Institutional-Based View (IBV) literature, and adopting a quantitative research with the application of secondary data analysis, the study found seven significant locational factors determining FDI inflows into the Vietnamese economy, such as business freedom, market size, labor cost, trade freedom level, inflation rate, human capital, and the effectiveness of property rights. Political risk, monetary freedom, corruption, the country's WTO accession, and the global financial crisis are found to be irrelevant to the inbound investments in the modern economy. A macro-level account and the policy implications are suggested for the promotion of FDI inflows into Vietnam to ensure the country's continuous and sustainable economic development.