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Foreign Direct Investment Absorption Capacity

Author

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  • Nguyen Hong Son

    (VNU International School, Vietnam National University, Hanoi, Vietnam)

  • Ly Dai Hung

    (VNU International School, Vietnam National University, Hanoi, Vietnam)

Abstract

We characterize the long-run foreign direct investment (FDI) absorption capacity by both direct and indirect methods on one cross-section data sample covering 180 economies from 1980 to 2013. The capacity is built up on productivity growth rate, savings–investment gap by the first approach and on financial development level by the second one. Two methods together reveal that deeper international financial integration by a higher capital account openness can expand substantially the foreign capital absorption capacity.

Suggested Citation

  • Nguyen Hong Son & Ly Dai Hung, 2019. "Foreign Direct Investment Absorption Capacity," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 10(01), pages 1-16, February.
    • Handle: RePEc:wsi:jicepx:v:10:y:2019:i:01:n:s1793993319500042
    DOI: 10.1142/S1793993319500042
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