Impact of foreign direct investment, trade openness and economic institutions on growth in emerging countries: the case of Vietnam

Abstract

This article investigates the role of economic institutions and economic openness in the growth of a specific emerging economy – Vietnam. The data from Vietnamese 63 provinces in the period of 2005-2015 have been collected to examine the influences of institutional quality on the inward FDI, trade and growth. By employing the system GMM estimators, our main findings show that, first, the combined effect of inward FDI with trade openness has a substitute effect on the economic growth while they have a positive impact taken separately. This article discusses this interesting aspect. Second, economic institutions significantly influence the combined effects of foreign direct investment with trade openness in improving economic growth.