FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH NEXUS: EVIDENCE FROM HANOIVIETNAM

Over the past years (from 1990 to 2019), the average growth rate of Hanoi, Vietnam’s capital, is about 1.5 higher than that of Vietnam’s economy. Theoretically, foreign direct investment (FDI) is one of the major engines powering this impressive growth. But in reality how does FDI inflow affect real gross domestic product per capita (Y ) in Hanoi? What are policy implications to further leverage positive impact of FDI in the long run? The results of the research indicate that FDI has no impact on the dependent variable in the short run. In the long run, the impact of FDI is found to be much smaller than that of public investment (PI), respectively 0.01 and 0.09 percent. More interestingly, there exists an unbiased bilateral nexus between FDI and PI.