The effect of public investment on private investment and economic growth in Vietnam

Abstract

The study used a co-integration method (Fully Modified OLS and Dynamic Panel OLS) to assess the long-run impact of public investment on private investment and economic growth, using data from 22 economic industries over a 27-year period (1990-2016). We have obtained strongly consistent evidence of the positive effect of private and public investment on industrial GDP in Vietnam. We find that public investment not only helps spur private investment, but also boosts GDP in the long run. This evidence is important in deciding whether to maintain the investment from the public sector. Nonetheless, there is some evidence suggesting that the investment from state-owned enterprise is not as efficient as the public investment in infrastructure. However, the investment from state-owned enterprise combined with public investment tends to decline effects on GDP, thus calling for the further restructuring of the state-owned enterprises in Vietnam.

Keywords

• đầu tư công
• đầu tư khu vực nhà nước
• tăng trưởng kinh tế
• tổng đầu tư tư nhân