IMPACTS OF FREE TRADE AGREEMENTS (FTA) ON FLOWS OF FOREIGN DIRECT INVESTMENT (FDI) IN VIETNAM FOR THE PERIOD 2005 – 2017

Abstract

Since the economic reform in 1986, Vietnam has signed many free trade agreements (FTAs). The first FTA is AFTA that was signed in 1996, just one year after Vietnam joined ASEAN, which is currently named ASEAN Economic Community (AEC). In 2007, Vietnam formally became a member of the World Trade Organisation (WTO) and began advocating for global intergration. Existing studies on effects of FTA in Vietnam mainly analysed bilateral trade between members. Our study thus fill a gap in the existing literature by investigating the effects of FTAs on inward FDI into Vietnam. Specifically, we apply knowledge-capital model to examine the impacts of FTAs on flows of FDI from 24 countries into Vietnam for period of 2005 – 2017.

Keywords: FTA, FDI, knowledge-capital model, Vietnam.