Debunking the Myth of Foreign Direct Investment toward Long-Term Sustainability of a Developing Country: A Transaction Cost Analysis Approach

Hoang Viet Nguyen, Thanh Tu Phan and Antonio Lobo
Additional contact information
Thanh Tu Phan: Research Department, HKT Consultant, Hanoi 100000, Vietnam
Antonio Lobo: Department of Management and Marketing, Faculty of Business and Law, Swinburne University of Technology, Hawthorn, Victoria 3122, Australia

Sustainability, 2019, vol. 11, issue 17, 1-26

Abstract: This study focuses on the relationship between foreign direct investment (FDI) and sustainability in a developing host country, i.e., Vietnam, using the transaction cost approach. Secondary panel data were obtained from 62 provinces in Vietnam for the period between the years of 2010 and 2016. The analysis of the data was performed using the fixed effects regression model, which yielded interesting and controversial findings. Essentially, it was demonstrated that the FDI made by enterprises and the subsequent employment that it generated had several positive and significant influences on the long-term sustainability of provinces in Vietnam. However, the downside was that the value of fixed assets and long-term investment of FDI projects in conjunction with the size of the provinces negatively influenced their long-term sustainability. The findings of this study have important academic and practical implications. We propose some policy changes that would considerably improve the efficacy and effectiveness of FDI. This, in turn, will certainly enhance the long-term sustainability of host countries, especially developing ones.

Keywords: FDI; foreign direct investment; transaction costs; sustainability; province; developing country; Vietnam (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.mdpi.com/2071-1050/11/17/4569/pdf (application/pdf)
https://www.mdpi.com/2071-1050/11/17/4569/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:11:y:2019:i:17:p:4569-:d:260119

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().