Foreign Direct investment (FDI) has been considered a very important factor in the recent growth of Vietnam’s economy as well as the reduction in poverty, these effects has for long been an issue of intense argument for a long time. Although this debate has provided rich insights in to the relationship between FDI and growth, poverty alleviation in developing countries, there is very little empirical analysis of the issue in Vietnam compared to other developing countries especially in applying econometric model to test the impact of FDI on economic growth and poverty alleviation in Vietnam.
The purpose of this research is to examine the relationship between FDI and economic growth and Poverty alleviation in Vietnam by using empirical panel data across provinces and cities in Vietnam in order to find the contribution of FDI to provincial poverty reduction. The result provides empirical evidence on the impact of FDI on the economic growth as well as poverty alleviation in surveyed provinces and cities in Vietnam from the period from 1995 to 2005. The major findings derived from the research are: First, The inflows of FDI in a province have a significant and positive effect on economic growth. Second, the economic growth at the province has positive and statistically significant impact on the poverty alleviation. Third, the inflows of FDI have a directly and strongly positive and significant impact on the poverty reduction in a province.

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