Impact Of Foreign Direct Investment On Vietnam Employment

In the context of economic globalization,foreign direct investment has helped many developing countries lacking capital.After nearly 30 years of reforms and opening up,foreign direct investment has made a major contribution to the economic development of Vietnam Economic Zone.Foreign direct investments cover insufficiency of economic funds,promoted GDP growth,introduced advanced technology,promoted upgrading of Vietnam’s industrial structure,expand Vietnam’s export trade,and introduce market mechanisms.Vietnam has abundant labor resources.The inflow of foreign direct investment has created new employment opportunities in Vietnam,promoted the development of labor resources and improved the level of labor capacity and welfare.However,due to the different characteristics of Vietnam’s various industries and their different investment environments,the impact of foreign direct investment on employment in various industries differs.The study about FDI effects on employment has important practical significance.This article will use the industry panel data from 2005 to 2015 to analyze the effect and mechanism of foreign direct investment on employment in Vietnam using fixed effects model and random effects model method.Thesis is divided into six chapters: Chapter 1 Introduction,research background and significance,the main ideas and content framework of this study,the main research methods of this article,innovation and deficiencies.The second chapter is the literature review of the basic theory of foreign direct investment(hereandafter “FDI”)and domestic and foreign employment,the theory of relationship between FDI and employment,and the related theory of employment effects of FDI.The third chapter analyzes the theoretical mechanism of the impact of FDI on employment.The fourth chapter analyzes development of FDI in Vietnam over the past 30 years divided into quantitative growth,regional distribution and investment types;then analyzes the increase in foreign direct investment in Vietnam’s labor force,structure-quality and wage and welfare status.In order to empirically analyse the impact of FDI on employment in Vietnam the fifth chapter takes employment of each industry as an explanatory variable and empirically analyzes FDI of each industry as the core explanatory variable.Taking into account an influence of other factors in international and domestic markets,we chose the four variables of wages,human capital,gross domestic product,and trade of each industry as the control variables.The analysis results show that FDI has a strong role in promoting employment in all industries;in the manufacturing industry,FDI generates a stronger employment effect.The last chapter is the conclusion of the thesis and policy recommendations.