The Relationship between Economic Growth and FDI: Evidence from Nam Dinh Province in Viet Nam


Nguyen Thi Tuyet ,

Download Full PDF Pages: 23-28 | Views: 661 | Downloads: 158 | DOI: 10.5281/zenodo.3832953

Volume 9 - April 2020 (04)


The purpose of this study is to examine the relationship between economic growth and foreign direct investment (FDI) in Nam Dinh province for the period 1987-2019. The paper uses a Vector Autoregression model (VAR) to process the time-series data set. Moreover, the Granger causality test was done via four economic variables, namely gross regional domestic product (GRDP), foreign direct investment (FDI), the labor force (LF) and openness of the economy (OPEN). The empirical results show that GRDP positively effects on FDI at lag 1 while only FDI in the previous two years is considered as effecting on current economic growth at 10% statistically significant. Eventually, the paper suggests some policy implications for attracting more FDI for further supporting economic growth in Nam Dinh province.


FDI, economic growth, provincial level, labor force, openness.
JEL code: F15, F21, F43


                   i.            Anh, N., et al. (2006). The impact of FDI on economic growth in Vietnam. Report by SIDA Project, 2001-2010, Central Institute for Economic Management.

      ii.            Anwar, S., and Lan, N. (2011). FDI and export spillovers: Evidence from Vietnam. International Business Review, 20:177-193. DOI: 10.1016/j.ibusrev.2010.11.002 

    iii.            Bhandari, R., Dhakal, D., Pradhan, G., and Upadhyaya, K. (2007). Foreign aid, FDI and economic growth in East European Countries. Economics Bulletin, 6 (13),1-9.

     iv.            Blomstrom, M., Lipsey, R.E., and Zejan,M. (1994). What explains developing country growth. 4132, Cambridge.

       v.            Blomstrom, M., Lipsey, R.E and Zejan, M. (1996). Is Fixed Investment the Key to Economic Growth?. Quarterly Journal of Economics, Vol. CXI, Issue 1: 269-276.

     vi.            Borensztein, E., De Gregorio, J., and Lee, J.W. (1998). How Does Foreign Direct Investment Affect Economic Growth?. Journal of International Economics. 45: 115-135.

   vii.            Campos, N.F., and Kinoshita, Y. (2002). FDI as technology transferred. Center for Economic Policy Research. Discussion Paper 3417.

 viii.            Chowdhury, A., and Marvrotas. (2003). FDI and growth: What causes What?. Department of Economics, Marguette University, USA, World Institute Development Economic Research/United Nation University.

     ix.            De Gregorio, J. (1992). Economic Growth in Latin America. Journal of Development Economics, 39: 59-84.

       x.            De Mello, L.R. (1997). Foreign Direct Investment in Developing Countries and Growth: A Selective survey. Journal of Development Studies. 34: 1-34.

     xi.            Ha, N.H.,(2016). The relationship between FDI and economic growth in Tra Vinh province. Journal of Integration and Development, 26(36), 90-95.

   xii.            Hoa, N. (2004). FDI and its contributions to economic growth and poverty reduction in Vietnam (1986-2001). Peter Lang. Frankfurt am Main. Germany.

 xiii.            Huong, N., and Nhuong, B. (2003). Some lessons draw out for Vietnam as comparing FDI inflows to Vietnam and China. Journal of Economics and Developments, 86: 55-75.

 xiv.            Jorge Bermejo Carbonell &Richard A. Werner. (2018). Does Foreing Direct Investment Generate Economic Growth? A New Empirical Approach Applied to Spain. Economic Geography Journal. 94 (4), 425-456.

   xv.            Khawar, M. (2005). FDI and economic growth: A cross-country analysis. Global Economy Journal, 51-14 De Druyter.

 xvi.            Lan, N.(2006). FDI in Vietnam: Impact on Economic Growth and Domestic Investment. Mimeo, Center for Regulation and Market Analysis, University of South Australia.

xvii.            Mai, H.T.T., & Thuy, P.T.T. (2016). The relationship between FDI and economic growth in Khanh Hoa province. Science Journal, 44, 28-38.

xviii.            Mai, P. (2003). The Economic Impact of FDI Flows on Vietnam: 1988-98. Asian Studies Review, 2791:81-98.

 xix.            Omri, A., and Kahouli, B. (2014). The nexus among foreign investment, domestic capital and economic growth: Empirical evidence from MENA region. Research in Economics, 68: 257-263. DOI: 10.1016/j.rie.2013.11.001

   xx.            Phuc, D.N (2004). FDI in Vietnam- The fact and perspective. Journal of economic research, 3-15.

 xxi.            Solow R. (1956). A Contribution to the Theory of Economic Growth. Quarterly Journal of Economics 70: 65-94.

xxii.            Trang, T.H.D, Duc Hong Vo, Anh The Vo & Thang Cong Nguyen. (2019). Foreign Direct Investment and Economic Growth in the Short Run and Long Run: Empirical Evidence from Developing Countries. Journal of Risk and Financial Management. 12, 176; DOI:10.3390/jrfm12040176

xxiii.            Yao, S. (2006). On economic growth, FDI and exports in China. Journal of Applied Economics, 38:  339-351.

Cite this Article: