Abstract:

This paper investigates the role of economic, instructional and political factors in attracting Foreign Direct Investment (FDI) inflows in Indochina (Cambodia, Laos, and Vietnam CLV) economies. Using panel unit-root test and Random effects on panel data for 16 years from 1996 to 2012 to examine significant determinants of FDI in Indochina, the paper takes into account economic factors (inflation rate, trade openness, market size), institutional factors (corruption and rule of law), and political factors (political stability, government effectiveness, regulatory quality, voice and accountability) to explores the role of these determinants. The results show that market size, government effectiveness, rule of law and political stability are statistically significant and have positive influence on inward FDI.