Heterogeneous Impacts of Digital Transformation and Institutional Quality on Foreign Direct Investment in Vietnam

Abstract

Attracting foreign direct investment is an important financial channel to supplement input resources and create new momentum for economic development. This study aims to draw an overall picture of the impacts of digital transformation and institutional quality on attracting foreign direct investment in Vietnam from 1995 to 2022 at different quantiles. The results obtained from the autoregressive distributed lag approach show that digital transformation positively impacts FDI, while the influence of institutional quality is unclear. At the same time, the results from the quantile-on-quantile approach indicate that digital transformation has an essential impact on FDI at quantiles above 50%, while the impact of institutional quality is weak and medium at overall quantiles. From these findings, the study discusses and proposes some policy implications to improve the effectiveness of attracting foreign direct investment for Vietnam.