Impact of Foreign Direct Investment and International Trade on Economic Growth: Empirical Study in Vietnam

The study aims to assess the impact of foreign direct investment (FDI) and international trade (export and import) on Vietnam's economic growth for the 2000-2018 period. Secondary data is taken from the General Statistics Office of Vietnam. Ordinary least-square method is used in analyzing the impact of FDI, export and import on economic growth of Vietnam. Empirical test results show that FDI and international trade are related to Vietnam's economic growth. However, each economic variable has a different impact. FDI has a positive and statistically significant influence on economic growth of Vietnam. Export also has positive and statistically significant impact to the economic growth, while import has a negative but not statistically significant effect. The result is useful for the policy makers of Vietnam on foreign economic relations. In order to improve the effect of FDI and international trade on growth of the economy, the government of Vietnam should: (1) continue applying preferential policies to attract FDI; (2) select foreign investors aiming to quality, efficiency, high technology and environmental protection; (3) continue pursuing export-oriented policy; (4) enhance the added value of exported goods and control the type of imported goods; (5) further liberalize trade through signing and implementation of international trade commitments.