This study explores factors that determine the economic growth in Vietnam by using time-series model in 1988-2013. The study shows that there are strong and positive effects of domestic investment and foreign direct investment on Vietnamese economic growth as a channel of increasing the stock of capital. Exchange rate and Asian financial crises also determine the economic growth. However, human capital and trade in Vietnam are not yet the channels that increase Vietnam’s economic growth. | Hoàng Thị Thu Tạp chí KHOA HỌC & CÔNG NGHỆ 124(10): 31 - 37 DETERMINANTS OF ECONOMIC GROWTH IN VIETNAM Hoang Thi Thu* College of Economics and Business Administration - TNU SUMMARY This study explores factors that determine the economic growth in Vietnam by using time-series model in 1988-2013. The study shows that there are strong and positive effects of domestic investment and foreign direct investment on Vietnamese economic growth as a channel of increasing the stock of capital. Exchange rate and Asian financial crises also determine the economic growth. However, human capital and trade in Vietnam are not yet the channels that increase Vietnam’s economic growth. Keywords: determinant, economic growth, FDI, domestic investment, Vietnam INTRODUCTION* Recognized as a premier target for the economic development, economic growth and its determinants have attracted increasing attention in both theoretical and applied research. Literature on economic growth showed that there are a several partial theories discussing the role of various factors in determining economic growth. In neoclassical growth model, such as Solow’s growth model, investment and labor are emphasized as important determinants of economic growth. The endogenous growth theory of Romer (1986, 1990) and Lucas (1988) added human capital and innovation as the new factors for explaining economic growth. Besides, labor, human capital, domestic investment, openness and some non economic factors showed both insignificant and significant effects on economic growth in several empirical researches. Since the launch of market-oriented economic reforms in 1986, Vietnam move towards trade liberalization. Market orientation, openeconomy and competition for foreign direct investment with other regional and global markets were important policies to Vietnamese government restructuring the economy. Economic growth increased dramatically in Vietnam over time. In 2013, the GDP value was nearly seven times that .
