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Journal of Economic Integration 2011 December;26(4) :721-739.
Aid and Foreign Direct Investment in Vietnam

Chengang Wang V. N. Balasubramanyam 

University of Bradford
Lancaster University
Copyright ©2011 Journal of Economic Integration

This short paper explores the complementarity between foreign aid and foreign direct investment (FDI). Recent studies on aid concluded that aid should come to an end or be reduced with a radical modification of the terms and conditions and FDI and trade should replace aid as the engine of development. In this paper, we argue that aid complements FDI and advances the efficacy of FDI in promoting growth and development in the developing countries. Using data from the provinces in Vietnam, the statistical analysis suggests that aid has a positive impact on inflows of FDI and aid can complement FDI in promoting economic growth.

JEL Classification: F21, F35, O19

Keywords: Foreign Direct Inverstment | Aid | Economic Growth | Vietnam
1. Anwar, S., & Nguyen, L. P. (2010), Foreign direct investment and economic growth in Vietnam. Asia Pacific Business Review, 16(1), 183-202.
2. Balasubramanyam, V. N., & Mahambare, V. (2003), FDI in India. Transnational Corporations, 12(2), 45-72.
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