Fiscal Policy in Association with Sustainable Economic Growth in the Period 2011-2020

By making use of a recently released panel dataset that covers 61 provinces of Vietnam, this paper examines the link between fiscal decentralisation and economic growth. Significant fiscal decentralisation has taken place in Vietnam from the mid-1990s. This paper explicitly considers the effect of fiscal decentralisation on economic growth (1) under the 1996 State Budget Law, which covered the period 1996 to 2001, and (2) under the 2002 State Budget Law, which covered the period 2002 to 2007. Our empirical analysis reveals that economic growth in Vietnam is positively associated with revenue decentralisation but negatively associated with expenditure decentralisation.

To analyze the impact of FDI and TO on economic growth in Vietnam, the research team collected yearly data from 1991--2023 from the Vietnam General Statistics Office on the IFS-IMF and WB sites. The study used the VECM model with the following endogenous variables: foreign direct investment (FDI), trade openness (TO), real gross domestic product (GDPR), and the interest rate of the U.S. Federal Reserve (IFED). Research results have shown that maintaining economic growth over the years drives economic growth. Moreover, the research supports the view that foreign direct investment and trade openness play important roles in promoting economic growth (g) in Vietnam. The authors propose some recommendations for attracting and using FDI and increasing trade openness to encourage economic growth in Vietnam.

The paper investigates the correlation between stock market, real estate market, and economic growth in Vietnam, which is an emerging country. Quarterly data in Vietnam from the third quarter of 2004 to the third quarter of 2018 were utilized. By using the Autoregressive Distributed Lag (ARDL) approach, the results reveal that economic growth is positively associated with stock market and real estate market. An unprecedented finding of this study is that economic growth (GDP) is more correlated to stock market efficiency (SME) than net trading value by foreign investors (FI). Moreover, global financial crisis (GFC) exerts a negative impact on economic growth and real estate market in Vietnam. Further, net trading value by foreign investors (FI) also negatively influences real estate market (REM) in the short term. The study has greatly succeeded in giving first empirical evidence on the relationship between stock market, real estate market, and economic growth in Vietnam. More than that, the results show the key role of global financial crisis in this correlation. The findings are valuable to economies around the world, especially bringing a practical and meaningful value to developing countries like Vietnam.

Since the beginning of the renovation process or “Doi Moi” in 1986, Vietnam’s economy has experienced relatively high economic growth. Besides greater openness in trade and investment, governance reform has been one of the driving forces of the country’s fast and sustainable growth. Fiscal decentralisation has been one of the key reforms that saw central government granting more fiscal autonomy to provincial governments, who now have a greater discretion than before in collecting and distributing resources for developmental purposes in their jurisdictions. Using a newly available provincial panel dataset, this paper examines the effects of fiscal decentralization on economic growth in Vietnam for the period 2004–2010 by applying new proxy measures of fiscal decentralisation as the ratio of different types of revenue over total expenditure of provinces. The results suggest a significant positive effect of fiscal decentralisation on provincial economic growth in Vietnam. The empirical models adopted also address the concerns of endogeneity and unobserved heterogeneity between provinces.

ABSTRACTThis study offers an insight into the public governance role in the relationship between fiscal decentralization and provincial economic growth in Vietnam. Fiscal decentralization measures are assorted. Applying a sequential (two‐stage) estimation for the panel data of 62 provinces of Vietnam over the 2006–2015 period, we find that first, fiscal decentralization is positively related to the economic growth of Vietnamese provinces. Second, the effects of public governance on economic growth vary across provinces depending on various levels of local public governance. Interestingly, the effect of fiscal decentralization is strengthened when this variable is added along with better quality of public governance. In a region of high public governance quality, fiscal decentralization exerts a positive effect on its economic growth. Our findings imply that the design of fiscal decentralization needs to be associated with local governments’ ability of public governance to improve the local economic growth.

Approaching by spatial regression method, this study examines the impact of fiscal decentralisation on economic growth in 63 provinces/cities of Vietnam in the period 2010–2020. Findings suggest that, in general, revenue decentralisation and expenditure decentralisation not only have a positive impact on the economic growth of provinces/cities but also have spillover effects on other locations in improving GRDP per capita. The above findings provide some important policy implications for improving fiscal decentralisation to promote economic growth in Vietnam.

Environmental effects of Chinese-style fiscal decentralization and the sustainability implications

PurposeThe authors test the effect of expenditure decentralization and fiscal equalization on short- and long-run economic growth and estimate two-step generalized method of moment (GMM) simultaneous equations models, using panel data for China and India for the period 1985 to 2005. The authors estimate two simultaneous equations: a growth equation and equalization equation and find that expenditure decentralization has a negative and statistically significant effect at conventional levels on short-run economic growth for both China and India. However, the authors also find that this result is sensitive to the set of included explanatory variables. This leads the authors to conclude that expenditure decentralization has no effect on short-run economic growth for either country. The authors also find that expenditure decentralization has a positive and statistically significant effect on fiscal equalization for both countries but find no evidence that fiscal equalization affects short-run economic growth for either China or India. In contrast, the authors find that expenditure decentralization has a positive effect on long-run economic growth in the case of India, but not in the case of China. Finally, the authors report evidence that fiscal equalization has no effect on long-run economic growth in the case of China; however, the authors find that equalization has a positive and statistically significant at conventional levels effect on long-run economic growth in India.Design/methodology/approachThe authors estimate two-step GMM simultaneous equations models, using panel data for China and India for the period 1985 to 2005. To examine the effect of fiscal decentralization (FD) policies on economic growth in China and India, the authors estimate two equations: a growth equation and an equalization equation. For the growth equation, the authors adopt a production-function-based model that is widely used in the empirical literature on growth; however, the authors do make some compromises with this specification due to the unavailability of certain data. For the equalization equation, the authors include variables that economic theory and empirical evidence suggest influence fiscal disparities among subnational governments which in turn influence the demand for horizontal fiscal equalization (HFE). To the extent possible, the authors employ the same econometric specification, variable constructions and sample periods for both China and India. The authors believe this strategy provides a more rigorous test of the FD hypothesis.FindingsThe authors find that expenditure decentralization has a negative and statistically significant effect at conventional levels on short-run economic growth for both China and India. However, the authors also find that this result is sensitive to the set of included explanatory variables. This leads to conclude that expenditure decentralization has no effect on short-run economic growth for either country. The authors also find that expenditure decentralization has a positive and statistically significant effect on fiscal equalization for both countries but find no evidence that fiscal equalization affects short-run economic growth for either China or India. In contrast, the authors find that expenditure decentralization has a positive effect on long-run economic growth in the case of India, but not in the case of China. Finally, the authors report evidence that fiscal equalization has no effect on long-run economic growth in the case of China; however, the authors find that equalization has a positive and statistically significant at conventional levels effect on long-run economic growth in India.Research limitations/implicationsDue to the importance of FD policies, especially to many developing countries that are currently pursuing decentralization reforms, future research should examine the effect of FD on economic growth for other countries. Furthermore, although it would be difficult to do so, future research should examine whether FD promotes political stability on ethnically diverse countries.Originality/valueTo the best of the authors’ knowledge, no one has examined the effect of FD policies on India's growth experience. What is more is that this is also the first of its kind to have a comprehensive empirical investigation into these two major developing countries with very interesting similarities and differences in FD policies. It is thus of great importance to examine the effect of expenditure decentralization and HFE on economic growth in China and India.

Objective: This article examines the relationship between foreign direct investment (FDI) and Vietnam's economic growth in the period 1991-2023. Theoretical Framework: Based on the theory of foreign investment and economic growth of economists such as Mankiw, Romer, and Weil (1992), Jones (1995), Binh & Lang (2008), and Tung & Duong (2019), the research team built the regression model that shows the relationship between FDI and GDPr. Method: The author collected data on FDI, and GDPr (variable representing economic growth) in the period 1991-2023 from GSO, International Financial Statistics, WB. The collected data was analyzed by software Eviews12. Results and Discussion: the results showed GDPR of one previous year and GDPR of the year under consideration has a positive relationship when last year's GDP fluctuated by 1%, GDPR of the year under consideration will fluctuate by 0.381721%. Between FDI and GDPR, there is a positive relationship, when FDI fluctuates by 1%, GDPR will fluctuate by 0.020825%. Research Implications: Research results support the view that foreign direct investment (FDI) plays an important role in promoting economic growth (g) in Vietnam. Originality/Value: From the research results, the author makes a number of recommendations to promote the attraction and effective use of foreign direct investment capital, supporting economic growth.

This paper analyses and forecasts of carbon dioxide (CO 1 ) emissions, renewable energy consumption, and gross domestic product (GDP) for Vietnam during the period of 2010 to 2019. These three variables are important factors that affect the energy efficiency, economic growth as well as climate change in Vietnam. Thus, this paper employs the grey prediction models including GM (1,1) and DGM (1,1) to predict three variables. According to forecasting results, the CO 1 emissions of Vietnam will grow by 3 %, the renewable energy consumption is not increase significantly, and the GDP is forecasted to increase 5% in 2019 compared with 2010. The study provides policy makers with useful information in finding the solutions to improve energy efficiency, economic growth and environmental protection in Vietnam.

This study's goal is to examine how technology and human capital interact with education and health indicators on economic growth and poverty alleviation in Vietnam. The second data of World Bank data is utilized in this study. We use the autoregressive moving average model. The research period starts from 2008 to 2021 in Vietnam. We found that technology and technological innovation have a very significant impact on Vietnam's economic growth, strengthened by education and health. However, the poverty rate is an obstacle to economic growth in Vietnam. This shows that human capital and technology are the strongest factors in increasing economic growth and reducing poverty.

Together with the impact of the post-COVID-19 pandemic, the world economy has had many fluctuations, especially the global economic crisis, which has reduced economic growth and caused inflation to rise in many countries. However, the goal of high and sustainable economic growth along with low inflation is often the main goal of each country's macroeconomic policy. So, this study aims to determine the relationship between inflation and economic growth in Vietnam, in the period 1996-2023, to determine the inflation threshold and make effective recommendations. The regression will use the least squares method (OLS) with the Newey-West standard error. This study shows that inflation supports growth in the short term and harms growth in the long term, at a light level, but does not find a converse impact, which is economic growth affecting inflation. The relationship between economic growth and inflation is a long-term relationship. Simultaneously, the study also agrees that effective control of inflation is essential for economic growth in Vietnam by proposing some solutions.

This paper examines the relationship between commercial banks' characteristics and economic growth in Vietnam using the FEM and REM models to test the effect of commercial bank characteristics on economic growth in Vietnam. Using a panel dataset of 28 commercial banks from 2010 to 2021, we investigate the impact of bank characteristics on economic growth and provide some important findings. Our findings show that bank characteristics significantly affect economic growth. These results suggest that policymakers should focus on controlling banks’ activities to support economic growth in Vietnam. Overall, this study contributes to the existing literature on the role of commercial banks in promoting economic growth in developing countries like Vietnam.

Fiscal decentralization not only promotes economic growth but brings more power to local governments in attracting FDI inflows as well. However, economists and policy-makers often strongly debate the influence of FDI on the fiscal decentralization-growth relationship. This paper empirically investigates the role of FDI in the relationship between fiscal decentralization and economic growth for a panel dataset of 52 provinces in Vietnam during the period 2007-2016 using the two-step GMM Arellano-Bond and FE-2SLS estimators. The estimated results confirm that fiscal decentralization and FDI significantly enhance economic growth, but their interaction terms impede growth rate. In addition, public investment is a significant determinant. These findings suggest some important policy recommendations for central governments in developing countries, especially Vietnam.

This study employs an Autoregressive Distributed Lag (ARDL) model to assess the impact of foreign direct investment, trade openness, technological innovation, and industrial sector performance on economic growth in Vietnam during the period 1993-2023. The results show that, in the short run, foreign direct investment, trade openness, and industrial sector performance have positive impacts on economic growth, while technological innovation has a negative impact. In the long run, foreign direct investment and technological innovation positively affect economic growth, whereas trade openness and industrial sector performance have negative impacts. Based on these findings, the study suggests several policy implications: prioritizing the attraction of foreign investment projects that utilize modern technologies; promoting comparative advantages in international trade; diversifying export markets; restructuring production towards the development of high-tech industries; and fostering technological innovation to generate new technologies and knowledge, thereby supporting rapid and sustainable economic growth.