Developmental state and FDI attraction: a cross-country perspective on China, Singapore, and Vietnam

This study investigates the role of the developmental state in attracting foreign direct investment (FDI) in three Asian countries over short-term and long-term periods. The analysis focuses on three key dimensions of the developmental state: infrastructure investment, economic freedom, and human development. Empirical research was conducted using a sample from China, Vietnam, and Singapore, employing the vector error correction model from 1990 to 2021. This study highlights the developmental state’s role as a specific framework for economic planning and management, particularly in attracting FDI in these three countries. Furthermore, it underscores the strategic nature of FDI acquisition, advocating a long-term perspective and the implementation of a diverse range of policies. The research results indicate that the influence of the developmental state on FDI attraction in these countries varies across short- and long-term periods. Significantly, these variations are not correlated with the economic systems of each country. The evidence regarding the growth-enhancing effects of FDI has significant implications for policy design, emphasizing the need for policies focusing on economic liberalization and investments in infrastructure and human resources. Policies should concentrate on creating favorable conditions for attracting FDI.