Does public investment stimulate economic growth in Vietnam? An ARDL approach to test Keynes's theories

Abstract

The short- and long-term effects of public investment on economic growth continue to be vigorously debated worldwide and in Vietnam. This study employs the ARDL model to analyze the effect of public investment on Vietnam's economic development during the years 1995 to 2019 in order to augment empirical evidence on this topic. Research results show that growth in public investment, private investment and foreign investment all have a positive impact on economic growth in the long run. However, the short-term effect of public investment has not been confirmed. Similarly, the effect of public investment on economic growth is less than that of private investment. Based on empirical analysis, policy recommendations for improving the effectiveness of public investment in Vietnam are proposed.