A Study on the Impact of Foreign Direct Investment on Economic Development of Lao P.D.R.
NEW CONTRIBUTION OF DISSERTATION
PhD student: Khamsen SISAVONG
Topic: A Study on the Impact of Foreign Direct Investment on Economic Development of Lao P.D.R.
Supervisor: Assoc.Prof.Dr. Nguyễn Thị Tuyết Mai
Investigation into the effects of FDI on the economies of host countries is considered to be one of the two most important and most researched topics in international business (Driffield & Love, 2007). This study aims to examine the impact of FDI on several economic development indicators in the context of Laos. The study is important to help Laos enjoy further economic development as well as contributes to the literature of FDI and economic growth in the context of developing countries.
FDI has been suggested as a determinant of economic development in both developed and developing countries. Its important role in promoting economic growth and bringing many benefits to the economy is especially emphasized in the context of developing countries. However, the literature also provides mix findings pertaining to the effects of FDI, and there has been suggested that the link between FDI and economic development may be country and period specific. Therefore, it is important and meaningful to examine the impact of FDI inflows on economic development in Laos, which has received very modest research attention to date.
By examining the relationships between FDI and various indicators of economic development, the correlation results provide empirical evidence to support the important and positive role of FDI inflows on GNI per capita, Financial Capital (Gross capital formation, the long-term debt service on external debt, and the total debt service on external debt), Level of Technology, Human Capital, and Transportation and Communication. The research has contributed to both theoretical and practical sides. From theoretical perspective, the research helps to enrich the knowledge about the important topic pertaining to FDI’s impacts on economic development in general and in the context of a developing country in particular. From practical perspective, the research findings provide significant implications to policy makers in Laos.
The issue of FDI and its important role is more important for developing countries and the countries in transition like Laos because they lack capital, know how, and managerial skills. Understanding the role of FDI would help making good policies to attract more FDI for the purpose of economic development. Therefore, the results of this dissertation are expected to provide significant implications for policy makers. The results can be applied in the area of attracting the FDI flows. The dissertation can also provide recommendations for a better business conditions for investment and doing business.