The effect of public expenditure on economic growth in the Southeast region of Vietnam: Empirical evidence

Abstract

The Southeast region is considered a key and dynamic economic area in Southern Vietnam of which Ho Chi Minh City is the economic leader. This region priorly receives public expenditure from the state for both recurrent and investment spending, but will public expenditure positively affect economic growth? To answer this research question, this paper empirically investigates the effect of public expenditure on economic growth in the Southeast region over the period 2005-2018 using the difference GMM Arellano-Bond estimator. The robustness of estimates is checked by the FE-IV estimator. The estimated results indicate that public expenditure reduces economic growth in this region. However, population and infrastructure stimulate economic growth. These findings suggest some important policy implications related to public expenditure and economic growth in the Southeast region.

Keywords

• chi tiêu công
• tăng trưởng kinh tế
• đông nam bộ
• gmm sai phân
• iv-fe