The impact of economic policy uncertainty on attracting foreign direct investment and policy implications for Vietnam


Authors

  • Vu Thanh Huong Huong VNU University of Economics and Business
  • Dang Quynh Chi VNU University of Economics and Business
  • To Ngoc Lan VNU University of Economics and Business
  • Phan Duc Thao Nguyen VNU University of Economics and Business
DOI: https://doi.org/10.57110/vnu-jeb.v4i5.396

Keywords:

Economic policy uncertainty, foreign direct investment, Vietnam

Abstract

Using panel data from 13 countries for the period from 2000 to 2021, the paper analyses the impact of economic policy uncertainty on attracting foreign direct investment. The results show that economic policy uncertainty, trade openness, and exchange rates have a positive impact on foreign direct investment, while inflation has a negative impact on these capital flows. Based on this, the paper proposes several implications for countries and for Vietnam to enhance foreign direct investment attraction, focusing on implementing appropriate preferential policies during periods of uncertainty, improving the business environment, strengthening exchange rate policy stability, and promoting international economic integration. At the same time, businesses need to take advantage of policy uncertainty periods to restructure their organizations and capitalize on the incentives available during difficult times.

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25-10-2024

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Huong, V. T. H., Dang Quynh Chi, To Ngoc Lan, & Phan Duc Thao Nguyen. (2024). The impact of economic policy uncertainty on attracting foreign direct investment and policy implications for Vietnam. VNU JOURNAL OF ECONOMICS AND BUSINESS, 4(5), 30. https://doi.org/10.57110/vnu-jeb.v4i5.396

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