Regional determinants of FDI location in Vietnam. This paper examines empirically determinants of foreign direct investment (FDI) location in Vietnam. Based on a panel dataset of 63 provinces and cities in Vietnam from 2008 to 2012, linear regression models for panel data (fixed-effects and random-effects) and negative binomial models are applied in analysis. | Journal of Economics and Development, , , April 2016, pp. 19-37 ISSN 1859 0020 Regional Determinants of FDI Location in Vietnam Nguyen Thi Ngoc Anh University of Warsaw, Poland Email: ngocanhnguyen2312@ Abstract This paper examines empirically determinants of foreign direct investment (FDI) location in Vietnam. Based on a panel dataset of 63 provinces and cities in Vietnam from 2008 to 2012, linear regression models for panel data (fixed-effects and random-effects) and negative binomial models are applied in analysis. The empirical evidence confirms the significant impact of market potential, labour cost, labour quality, infrastructure, provincial policy effectiveness, and the previous year’s FDI concentration on FDI allocation between provinces and cities in Vietnam. Also, market potential and wage rate are statistically shown to affect the size of FDI projects. Moreover, estimation results suggest that provinces with higher FDI accumulation seem to create a dispersion force to new foreign investors and FDI between regions in Vietnam in the form of efficiency-seeking FDI. Keywords: Foreign direct investment (FDI); market potential; regional determinants. Journal of Economics and Development 19 Vol. 18, , April 2016 1. Introduction cational factors that have impact on FDI inflow is essential to amend this situation. After the reform policy called Doi Moi in 1986, Vietnam has shifted from a highly centralized planned economy to a socialist-oriented market economy. During the transformation process, foreign direct investment (FDI) by multinational corporations has played a very important role since it has brought a variety of benefits to the host nation such as capital, finished products, components, new technology, organizational and managerial skills, distribution channels and markets. The main purpose of this paper is to study determinants of FDI location in Vietnam at the provincial level after the country joined the World Trade
