This paper examines this issue in the case of Vietnam by applying the bounds testing (ARDL) approach to cointegration for the period from 1990 to 2017. ARDL approach is used to along with ECM to find out the long run relationship and short-run dynamics between the selected variables. The empirical results indicate a strong relationship between FDI and economic growth in Vietnam. On the policy front, the government could stimulate foreign direct investment through incentives to investors, creation of a good macroeconomic environment and a careful utilisation of loose monetary policy to grow the economy. |
