An Integrated Approach for Evaluating the Efficiency of FDI Attractiveness: Evidence from Vietnamese Provincial Data from 2012 to 2022

Abstract

In Vietnam, foreign direct investment (FDI) is an important capital flow for sustainable socio-economic growth and international economic integration, contributing to the supplementation of capital, modern technology, management and business capacity, and the ability to organize and participate in the global supply chain. In this paper, a novel hybrid model combining simple average combination of SMA (Simple Moving Average), IFTS (Improved Fuzzy Time Series), and DEA window analysis is proposed to evaluate FDI attractiveness in Vietnam. Five crucial indicators, including labor force (LF), gross regional domestic product (GDP), the Provincial Competitiveness Index (PCI), FDI by capital, and FDI by cases, were employed to explore their impacts on the efficiency of attracting FDI into provinces, for sustainable economic growth. First, the future values of indicators for 2021–2022 were predicted based on collected historical data from 2012 to 2020. Then, the DEA window was employed to evaluate the efficiency of the provinces in terms of their FDI attractiveness during the period 2012–2022. From the results, Binh Duong, Ho Chi Minh, and Vung Tau were found to be the most efficient localities at attracting FDI, while An Giang, Tuyen Quang, and Can Tho had the lowest FDI attractiveness indexes. The proposed model was proven to be effective in identifying both the provinces which should be targeted for further improvement, and the provinces which should serve as role models for other provinces. In this direction, this paper can serve as a significant guideline for decision-makers and the Government to improve FDI attractiveness, with solutions to attract FDI in a sustainable way.