Private Investment and Economic Development: Ensuring Sustainability in the Future

Dinh Trong An


Objectives: The objectives of this study are 1) to examine the role of private investment in economic development towards sustainability in Vietnam by utilizing provincial-level data from the period 2000–2020 and 2) to construct an economic development index based on four main pillars: economy, science and technology, energy models, and multidimensional poverty. Methods/Analysis: The study employed the CS-ARDL estimation method to investigate the short- and long-term relationships between private investment and economic development. Furthermore, to address issues related to slope heterogeneity, endogeneity, and cross-sectional dependence, the study applied the AMG and CCEMG models to assess this relationship in the long term. Findings: The study identified a positive long-term relationship between private investment and economic development. Additionally, investment in science and technology, agricultural land urbanization, vocational training for labor, trade openness, and private sector finance exhibited significant associations with private investment. Novelty/Improvement: The study successfully developed an economic development index and elucidated the relationship between private investment and economic development. The research underscores two critical strategies for attracting and promoting private sector investment: improving the workforce through training and expanding export markets. The effective implementation of these strategies can address subsequent challenges and expedite sustainable economic development progress.


Doi: 10.28991/HEF-2023-04-04-04

Full Text: PDF


Private Investment; Economic Development; EDI; Long-Term Impact.


Jędrzejczak-Gas, J., Barska, A., & Wyrwa, J. (2021). Economic development of the European Union in the relation of sustainable development—Taxonomic analysis. Energies, 14(22), 7488. doi:10.3390/en14227488.

Tran, T. T. T., Do, H. N., Vu, T. H., & Do, N. N. M. (2020). The factors affecting green investment for sustainable development. Decision Science Letters, 9(3), 365–386. doi:10.5267/j.dsl.2020.4.002.

Van Hoa, N., Van Hien, P., Tiep, N. C., Huong, N. T. X., Mai, T. T. H., & Phuong, P. T. L. (2022). The Role of Financial Inclusion, Green Investment and Green Credit on Sustainable Economic Development: Evidence from Vietnam. Cuadernos de Economia, 45(127), 1–10. doi:10.32826/cude.v1i127.600.

Qamruzzaman, M., & Karim, S. (2023). Does public-private investment augment renewable energy consumption in BIMSTEC nations? Evidence from symmetric and asymmetric assessment. Energy Strategy Reviews, 49, 101169. doi:10.1016/j.esr.2023.101169.

Dabbous, A., & Tarhini, A. (2021). Does sharing economy promote sustainable economic development and energy efficiency? Evidence from OECD countries. Journal of Innovation and Knowledge, 6(1), 58–68. doi:10.1016/j.jik.2020.11.001.

Nkoro, E., & Uko, A. kelvin. (2019). A critical approach to economic development. International Journal of Research in Business and Social Science (2147- 4478), 8(5), 228–236. doi:10.20525/ijrbs.v8i5.311.

Nnadozie, E., & Jerome, A. (2019). Definition and Measurement of Growth and Development. African Economic Development, 39–56. doi:10.1108/978-1-78743-783-820192003.

Cypher, J. M. (2014). The process of economic development. Routledge, London, United Kingdom. doi:10.4324/9780203080580.

Diaz-Sarachaga, J. M., Jato-Espino, D., & Castro-Fresno, D. (2018). Is the Sustainable Development Goals (SDG) index an adequate framework to measure the progress of the 2030 Agenda? Sustainable Development, 26(6), 663–671. doi:10.1002/sd.1735.

Deleidi, M., Mazzucato, M., & Semieniuk, G. (2020). Neither crowding in nor out: Public direct investment mobilising private investment into renewable electricity projects. Energy Policy, 140, 111195. doi:10.1016/j.enpol.2019.111195.

Plank, J., & Doblinger, C. (2018). The firm-level innovation impact of public R&D funding: Evidence from the German renewable energy sector. Energy Policy, 113, 430–438. doi:10.1016/j.enpol.2017.11.031.

Azhgaliyeva, D., Belitski, M., Kalyuzhnova, Y., & Romanov, M. (2018). Policy instruments for renewable energy: An empirical evaluation of effectiveness. International Journal of Technology Intelligence and Planning, 12(1), 24–48. doi:10.1504/IJTIP.2018.094409.

Ouedraogo, N. S. (2013). Energy consumption and economic growth: Evidence from the economic community of West African States (ECOWAS). Energy Economics, 36, 637–647. doi:10.1016/j.eneco.2012.11.011.

Ciburiene, J. (2016). The evaluation of economic development index of Poland and Lithuania in the context of the European Union. Equilibrium. Quarterly Journal of Economics and Economic Policy, 11(3), 437–449. doi:10.12775/EQUIL.2016.020.

Meyer, D. F., & de Jongh, J. (2018). An alternative multi-dimensional regional economic development index: A provincial application in South Africa. International Journal of EBusiness and EGovernment Studies, 10(1), 97–113.

Singh, A. K., Jyoti, B., Kumar, S., & Lenka, S. K. (2021). Assessment of global sustainable development, environmental sustainability, economic development and social development index in selected economies. International Journal of Sustainable Development and Planning, 16(1), 123–138. doi:10.18280/ijsdp.160113.

Zailani, M. N., Satar, N. H. M., & Zakaria, R. H. (2023). Multidimensional poverty measurement from Islamic perspectives: A survey of the literature. International Journal of Economics, Management and Accounting, 31(1), 77-98.

Cu, T. T., & Nguyen, T. A. (2021). Development of industrial parks and a new livelihood strategy for the people in Vietnam. Problems and Perspectives in Management, 19(1), 221–230. doi:10.21511/ppm.19(1).2021.19.

Tran, T. Q., Thi Nguyen, H. T., Hoang, Q. N., & Van Nguyen, D. (2022). The influence of contextual and household factors on multidimensional poverty in rural Vietnam: A multilevel regression analysis. International Review of Economics & Finance, 78(3), 390–403. doi:10.1016/j.iref.2021.12.012.

Reddy, K. S., Xie, E., & Huang, Y. (2016). Cross-border acquisitions by state-owned and private enterprises: A perspective from emerging economies. Journal of Policy Modeling, 38(6), 1147–1170. doi:10.1016/j.jpolmod.2016.10.002.

Vo, X. V. (2016). Finance in Vietnam-an overview. Afro-Asian Journal of Finance and Accounting, 6(3), 202–209. doi:10.1504/AAJFA.2016.079311.

Hai, H. D. T., Ngoc, A. M., Dang, N. N., & Thu, H. L. T. (2020). Vocational Training Policy for Ethnic Minority Labour in Transitional Countries: The Case Study in the Northwestern of Vietnam. Management for Sustainable and Inclusive Development in a Transforming Asia, 103–123. doi:10.1007/978-981-15-8195-3_6.

Triantis, S. G., & Meier, G. M. (1965). Leading Issues in Development Economics. Selected Materials and Commentary. International Journal, 20(3), 390. doi:10.2307/40200142.

Todaro, M. P. (1990). Economic Development in the Third World, Fourth Edition. Population and Development Review, 16(1), 182. doi:10.2307/1972548.

Schumpeter, J. A., & Swedberg, R. (2021). The theory of economic development. Routledge, London, unite Kingdom. doi:10.4324/9781003146766.

Hicks, N., & Streeten, P. (1979). Indicators of development: The search for a basic needs yardstick. World Development, 7(6), 567–580. doi:10.1016/0305-750X(79)90093-7.

Drewnowski, J. (1980). Social Indicators, Quality of Life and Economic Theory. Philosophica, 25(0), 15–32. doi:10.21825/philosophica.82619.

Seers, D. (2018). What are we trying to measure? Measuring development: The role and adequacy of development indicators. Routledge, London, United Kingdom.

Barska, A., & Jędrzejczak-Gas, J. (2019). Indicator Analysis of the Economic Development of Polish Regions in the Context of the Implementation of the Concept of Sustainable Development. European Journal of Sustainable Development, 8(5), 210. doi:10.14207/ejsd.2019.v8n5p210.

Drăgoi, D. (2020). Economic growth versus economic development. Atlantic Review of Economics: Revista Atlántica de Economía, 3(1), 3.

Coccia, M. (2011). The interaction between public and private R&D expenditure and national productivity. Prometheus: Critical Studies in Innovation, 29(2), 121–130. doi:10.1080/08109028.2011.601079.

Anna, B. (2016). Classification of the European Union member states according to the relative level of sustainable development. Quality & Quantity, 50(6), 2591–2605. doi:10.1007/s11135-015-0278-x.

Jędrzejczak-Gas, J., & Barska, A. (2019). Assessment of the Economic Development of Polish Regions in the Context of the Implementation of the Concept of Sustainable Development - Taxonomic Analysis. European Journal of Sustainable Development, 8(5), 222. doi:10.14207/ejsd.2019.v8n5p222.

Cao, Y., Tabasam, A. H., Ali, S. A., Ashiq, A., Ramos-Meza, C. S., Jain, V., & Shabbir, M. S. (2023). The dynamic role of sustainable development goals to eradicate the multidimensional poverty: evidence from emerging economy. Economic Research-Ekonomska Istrazivanja , 36(3), 2153715. doi:10.1080/1331677X.2022.2153715.

Balasubramanian, P., Burchi, F., & Malerba, D. (2023). Does economic growth reduce multidimensional poverty? Evidence from low- and middle-income countries. World Development, 161, 106119. doi:10.1016/j.worlddev.2022.106119.

Edward, & Suharjito. (2022). Tesla Stock Close Price Prediction Using KNNR, DTR, SVR, and RFR. Journal of Human, Earth, and Future, 3(4), 403–422. doi:10.28991/hef-2022-03-04-01.

Keynes, J. M. (1937). The general theory of employment. The quarterly journal of economics, 51(2), 209-223. doi:10.1007/978-3-319-70344-2.

Harrod, R. F. (1939). An Essay in Dynamic Theory. The Economic Journal, 49(193), 14. doi:10.2307/2225181.

Domar, E. D. (1946). Capital Expansion, Rate of Growth, and Employment. Econometrica, 14(2), 137. doi:10.2307/1905364.

Solow, R. M. (1956). A contribution to the theory of economic growth. Quarterly Journal of Economics, 70(1), 65–94. doi:10.2307/1884513.

Mfon Ekpo, G., B. Iwatt, E., & Akwawa Uduimoh, A. (2023). Private Investment and Economic Performance in Nigeria. AKSU Journal of Social Sciences, 3(1), 55–85. doi:10.61090/aksujoss.2023.005.

Nwakoby, C., & Bernard, A. U. (2016). Effect of Private Sector Investment on Economic Growth in Nigeria. NG-Journal of Social Development, 5(4), 150–167. doi:10.12816/0033095.

Shabbir, M. S., Bashir, M., Abbasi, H. M., Yahya, G., & Abbasi, B. A. (2021). Effect of domestic and foreign private investment on economic growth of Pakistan. Transnational Corporations Review, 13(4), 437–449. doi:10.1080/19186444.2020.1858676.

An, D. T. (2023). The Role of Local Government in Private Investment Intentions: A Case Study in Vietnam. International Journal of Sustainable Development and Planning, 18(2), 439–446. doi:10.18280/ijsdp.180212.

Bakhtyar, B., Sopian, K., Zaharim, A., Salleh, E., & Lim, C. H. (2013). Potentials and challenges in implementing feed-in tariff policy in Indonesia and the Philippines. Energy Policy, 60, 418–423. doi:10.1016/j.enpol.2013.05.034.

Bürer, M. J., & Wüstenhagen, R. (2009). Which renewable energy policy is a venture capitalist’s best friend? Empirical evidence from a survey of international cleantech investors. Energy Policy, 37(12), 4997–5006. doi:10.1016/j.enpol.2009.06.071.

Afonso, A., & Jalles, J. T. (2015). How Does Fiscal Policy Affect Investment? Evidence from a Large Panel. International Journal of Finance and Economics, 20(4), 310–327. doi:10.1002/ijfe.1518.

Vivarelli, M. (2014). Innovation, employment and skills in advanced and developing countries: A survey of economic literature. Journal of Economic Issues, 48(1), 123–154. doi:10.2753/JEI0021-3624480106.

Luo, S., Yimamu, N., Li, Y., Wu, H., Irfan, M., & Hao, Y. (2023). Digitalization and sustainable development: How could digital economy development improve green innovation in China? Business Strategy and the Environment, 32(4), 1847–1871. doi:10.1002/bse.3223.

De Silva, I., & Sumarto, S. (2014). Does Economic Growth Really Benefit the Poor? Income Distribution Dynamics and Pro-poor Growth in Indonesia. Bulletin of Indonesian Economic Studies, 50(2), 227–242. doi:10.1080/00074918.2014.938405.

OECD. (2007). Promoting pro-poor growth: Policy guidance for donors. Organization for Economic Cooperation and Development (OECD), Paris, France. doi:10.1787/9789264024786-en.

Tuan, T. M., & Dung, N. X. (2020). Developing human resource in research and development: international experiences and implications for Vietnam. Asian Journal of Political Science, 28(1), 1–12. doi:10.1080/02185377.2020.1712217.

Deaton, A. (2013). The great escape: health, wealth, and the origins of inequality. Princeton University Press, Princeton, United States. doi:10.1515/9781400847969.

Piketty, T. (2014). Capital in the twenty-first century. Harvard University Press, Cambridge, United States. doi:10.4159/9780674369542.

Aust, V., Morais, A. I., & Pinto, I. (2020). How does foreign direct investment contribute to Sustainable Development Goals? Evidence from African countries. Journal of Cleaner Production, 245, 118823. doi:10.1016/j.jclepro.2019.118823.

Gakpo, M. D. Y., Wujangi, M., Kwakye, M., & Asante, V. G. (2021). The impact of Microfinancing on poverty alleviation and small businesses in Ghana. International Journal of Social Sciences and Humanity Studies, 13(1), 1-28. doi:10.34109/ijsshs.202114001.

Baccini, L., Impullitti, G., & Malesky, E. J. (2019). Globalization and state capitalism: Assessing Vietnam’s accession to the WTO. Journal of International Economics, 119(4), 75–92. doi:10.1016/j.jinteco.2019.02.004.

McCaig, B. (2011). Exporting out of poverty: Provincial poverty in Vietnam and U.S. market access. Journal of International Economics, 85(1), 102–113. doi:10.1016/j.jinteco.2011.05.007.

GSO. (2023). General statistical office of Vietnam. Available online: (accessed on May 2023).

Quang, B. N., & Hong Van, H. T. (2020). Private Sector Development: A Comparative Study of China and Vietnam. International Journal of China Studies, 11(1), 73.

Tri, N. M., & Hoa, L. T. (2023). Science - Technology Development: a Case of Ho Chi Minh City, Vietnam. Journal of Law and Sustainable Development, 11(1), 1–18. doi:10.37497/sdgs.v11i1.407.

Klingler-Vidra, R., & Wade, R. (2020). Science and Technology Policies and the Middle-Income Trap: Lessons from Vietnam. Journal of Development Studies, 56(4), 717–731. doi:10.1080/00220388.2019.1595598.

Tung, L. T., & Binh, Q. M. Q. (2022). The impact of R&D expenditure on firm performance in emerging markets: evidence from the Vietnamese listed companies. Asian Journal of Technology Innovation, 30(2), 447–465. doi:10.1080/19761597.2021.1897470.

Do, H. T. H., Mai, C. N., mai, A. N., Nguyen, N. D., Pham, T. N., Le, H. T. T., Tran, M. D., & Vu, T. T. (2020). Impact of Vocational Training on Wages of Ethnic Minority Labors in Vietnam. The Journal of Asian Finance, Economics and Business, 7(6), 551–560. doi:10.13106/jafeb.2020.vol7.no6.551.

Hung, C. V., Vinh, T. P., & Thai, B. D. (2021). “The impact of firm size on the performance of Vietnamese private enterprises: A case study.” Problems and Perspectives in Management, 19(2), 243–250. doi:10.21511/ppm.19(2).2021.20.

Duong, M., Holmes, M. J., & Strutt, A. (2021). The impact of free trade agreements on FDI inflows: the case of Vietnam. Journal of the Asia Pacific Economy, 26(3), 483–505. doi:10.1080/13547860.2020.1765717.

Pesaran, M. H. (2021). General diagnostic tests for cross-sectional dependence in panels. Empirical Economics, 60(1), 13–50. doi:10.1007/s00181-020-01875-7.

Hashem Pesaran, M., & Yamagata, T. (2008). Testing slope homogeneity in large panels. Journal of Econometrics, 142(1), 50–93. doi:10.1016/j.jeconom.2007.05.010.

Pesaran, M. H. (2007). A simple panel unit root test in the presence of cross-section dependence. Journal of Applied Econometrics, 22(2), 265–312. doi:10.1002/jae.951.

Pedroni, P. (2004). Panel cointegration: Asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis. Econometric Theory, 20(3), 597–625. doi:10.1017/S0266466604203073.

Kao, C. (1999). Spurious regression and residual-based tests for cointegration in panel data. Journal of Econometrics, 90(1), 1–44. doi:10.1016/S0304-4076(98)00023-2.

Westerlund, J. (2007). Testing for error correction in panel data. Oxford Bulletin of Economics and Statistics, 69(6), 709–748. doi:10.1111/j.1468-0084.2007.00477.x.

Dumitrescu, E. I., & Hurlin, C. (2012). Testing for Granger non-causality in heterogeneous panels. Economic Modelling, 29(4), 1450–1460. doi:10.1016/j.econmod.2012.02.014.

Wang, Q., & Zhang, F. (2021). The effects of trade openness on decoupling carbon emissions from economic growth – Evidence from 182 countries. Journal of Cleaner Production, 279, 123838. doi:10.1016/j.jclepro.2020.123838.

Eberhardt, M., & Bond, S. (2009). Cross-section dependence in nonstationary panel models: a novel estimator. MPRA Paper, Munich Personal RePEc Archive, Munich, Germany.

Pesaran, M. H. (2006). Estimation and inference in large heterogeneous panels with a multifactor error structure. Econometrica, 74(4), 967–1012. doi:10.1111/j.1468-0262.2006.00692.x.

Khan, Z., Ali, M., Jinyu, L., Shahbaz, M., & Siqun, Y. (2020). Consumption-based carbon emissions and trade nexus: Evidence from nine oil exporting countries. Energy Economics, 89, 104806. doi:10.1016/j.eneco.2020.104806.

Bihn, L. D. (2018). Vietnam private sector: Productivity and prosperity. Economica, Hanoi, Vietnam. Available online: (accessed on December 2023).

Tuan, V. K. (2020). Analysis of Challenges and Opportunities for Vietnamese SMEs in the Globalization. Journal of Business Management and Economic Research, 4(2), 169–185. doi:10.29226/tr1001.2020.192.

United Nations Development Programme (UNDP). (2021). Multidimensional poverty in Viet Nam: reducing poverty in all its dimensions to ensure a good quality life for all. United Nations Development Programme (UNDP), Hanoi, Vietnam. Available online: (accessed on June 2023).

Center for WTO and Integration (2023). Summary of Vietnam's FTAs as of August 2023. Center for WTO and Integration, Hanoi, Vietnam Available online: (accessed on December 2023). (In Vietnamese).

Full Text: PDF

DOI: 10.28991/HEF-2023-04-04-04


  • There are currently no refbacks.

Copyright (c) 2024 Dinh Trong An