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Openness to trade, foreign direct investment, and economic growth in Vietnam

Author

Listed:
  • Anh-Tu Nguyen
  • Sajid Anwar
  • W. Robert J. Alexander
  • Shih-Hao Lu

Abstract

Using data over the period 1986 to 2020 and employing the Auto Regressive Distributed Lag bounds testing technique, we examine the linkages amongst economic growth, foreign direct investment (FDI), exports, and imports in Vietnam. The ARDL technique is particularly well-suited in the presence of a mixture of stationary and non-stationary variables. We find a long-run relationship indicating that FDI strongly promotes economic growth, but exports and imports do not have a statistically significant impact on growth. The robustness of these results is confirmed by a range of diagnostic tests and alternative methods of estimation. Additionally, the vector error correction model reveals that, in the short-run, both imports and exports have bidirectional Granger causality with FDI, while FDI has bidirectional Granger causality with economic growth in the long-run. Our findings suggest some policies to develop FDI to bolster economic growth.

Suggested Citation

  • Anh-Tu Nguyen & Sajid Anwar & W. Robert J. Alexander & Shih-Hao Lu, 2022. "Openness to trade, foreign direct investment, and economic growth in Vietnam," Applied Economics, Taylor & Francis Journals, vol. 54(29), pages 3373-3391, June.
    • Handle: RePEc:taf:applec:v:54:y:2022:i:29:p:3373-3391
    DOI: 10.1080/00036846.2021.2009112
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    Cited by:

    1. Nadia Ben Yedder & Malek El Weriemmi & Sayef Bakari, 2023. "The Impact of Domestic Investment and Trade on Economic Growth in North Africa Countries: New Evidence from Panel CS-ARDL Model," EuroEconomica, Danubius University of Galati, issue 2(42), pages 22-41, November.
    2. Peiwen Guo & Jun Fang & Ke Zhu, 2023. "The Spatial Spillover Effect and Function Routes of Transport Infrastructure Investment on Economic Growth: Evidence from Panel Data of OECD Members and Partners," Mathematics, MDPI, vol. 11(5), pages 1-26, February.

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