Open Access
Article
SciPap-1689
Do FDI and Institutional Quality Affect the Economic Growth of Local Governments Across Vietnam? Insights from Bayesian Modeling
1 Faculty of Finance and Banking, University of Finance – Marketing, 778 Nguyen Kiem Street, Phu Nhuan District, Ho Chi Minh City 70000, Viet Nam
2 Faculty Accounting and Auditing, Van Lang University, 45 Nguyen Khac Nhu Street, District 1, Ho Chi Minh City 70000, Viet Nam
3 Faculty of Finance and Banking, University of Finance – Marketing, 778 Nguyen Kiem Street, Phu Nhuan District, Ho Chi Minh City 70000, Viet Nam
4 Faculty of Finance and Banking, Ho Chi Minh City Open University, 35-37 Ho Hao Hon Street, District 1, Ho Chi Minh City 70000, Viet Nam
* Authors to whom correspondence should be addressed.
Abstract: This article aims to analyze the role of FDI and institutional quality in local economic growth in Vietnam. Using a dataset of 63 provinces in Vietnam between 2005 and 2020, the result of the Bayesian linear regression method cover that FDI has a negative effect on economic growth, while provinces have a negative effect on economic growth. High institutional quality (IQ) leads to high economic growth. Besides, the result of the article also shows that the interaction between FDI flows and institutional quality (FDIxIQ variable) positively impacts the economic growth of provinces in Vietnam. This implies that localities with good institutional quality will absorb FDI better. These findings suggest that policymakers should pay more attention to policies to attract FDI and improve institutional quality in order to promote sustainable GDP growth in the localities of Vietnam, thereby promoting the overall economic growth of Vietnam.
Keywords: Economic Growth, Fdi, Bayesian Linear Regression, Provinces Of Vietnam, Institutional Quality
JEL classification: C11 - Bayesian Analysis: General, F21 - International Investment • Long-Term Capital Movements, F43 - Economic Growth of Open Economies, O11 - Macroeconomic Analyses of Economic Development
Received: 16 May 2023 / Revised: 26 November 2023 / Accepted: 28 November 2023 / Published: 5 December 2023
