Relationship between the provincial competitiveness index and foreign direct investment capital in vietnam localities

Abstract

The study focuses on analyzing the relationship between the provincial competitiveness index (PCI) and foreign direct investment capital (FDI) attraction in Vietnam. The estimating random effect model (REM) method is used after the Hausman test with a data panel (observing data of the PCI component indexes of 63 localities in the period of 2013- 2019). The study also takes into account the lag in the impact of the independent variables on the dependent variable. Research results show that local governance’s administration relating to land access, time costs, informal costs, fair competition, leadership dynamics, and business support services have affected the FDI attraction in localities. Research expands by dividing into two groups of localities with high and low in FDI attraction. The result shows that the favorable conditions in land access and the dynamism of local leaders affect FDI attraction more strongly in the group which has large FDI inflows.