FORECASTING FOREIGN DIRECT INVESTMENT IN THAILAND AND VIETNAM USING ARIMAX MODEL
Keywords:
Foreign Direct Investment, Leading Indicators, ARIMAX ModelAbstract
The study is premised on the view that Foreign Direct Investment (FDI) plays an important role in economic development for Thailand and Vietnam during the past three decades. This paper uses ARIMAX model to explain and forecast the pattern of FDI in these two countries.
The study finds that GDP per capita, real interest rate, degree of openness and exchange rate can be used as leading indicators of FDI in both countries. The marginal effect of degree of openness to FDI is the highest among other leading indicators. This result confirms the mutually benefit of free trade and investment policy. Moreover, the model predicts that the FDI inflow into Thailand and Vietnam will be converged in the first quarter of 2017
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