JED, Vol. 20, No.1, April 2018, pp. 32-47
Impact of Globalization on Economic Growth in Vietnam: An Empirical Analysis
Abstract:This study aims at investigating the impact of globalization on economic growth in the case
of Vietnam. Empirical analysis is done by using time series data for the period from 1995 to
2014. The paper tested the stationary cointegration of time series data and utilized the error
correction modeling technique to determine the short run relationships among economic growth,
globalization, foreign direct investment, balance of trade and exchange rate variables. Then,
the long run relationship between economic growth and the variables representing economic
integration were estimated by ordinary least square. The results show that globalization, measured
by the KOF index, promotes economic growth and Vietnam has gained from integrating into
the global economy. The overall index of globalization had positively and significantly impacted
the economic growth in Vietnam. The results also indicated that economic globalization had a
significantly positive effect on economic growth in the period examined. The study further revealed
that foreign direct investment and the exchange rate affect economic growth positively whereas
balance of trade affects economic growth negatively.
Keywords:Globalization; economic growth; trade balance; foreign direct investment; cointegration.