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their impact on Vietnam’s EG and discusses policy implications for sustainable
development in the new context.
2. Literature review
2.1. The relationship between FDI and EG
There are many approaches when it comes to studying EG. In this study, EG is
understood as the increase in output/income achieved over a certain period of time. This
increase is reflected in the size and rate of growth. In essence, Foreign Direct Investment
(FDI) is an investment activity by a business in another country with the aim of making a
profit.
In empirical research, Muhammad, B. (2019), through the Generalized Method of
Moments (GMM) affirmed the positive impact of FDI on EG in some ASEAN countries in
the period 2001-2012. Triatmanto, B. (2023) also had the same opinion as Muhammad, B.
(2019) when finding a favorable relationship between FDI and EG in 4 ASEAN countries in
2000-2020. When studying this relationship in the United States in 1990-2022, Jiao, L.
(2024) also showed similar results
However, some empirical studies show an inverse relationship between FDI and EG.
Damijan, J. P. et al. (2001) studied in Estonia, Slovenia, Hungary, Slovakia, Bulgaria, the
Czech Republic, Romania and Poland and concluded that FDI has a negative impact on EG.
In addition, Alfaro, L. (2003) FDI can reduce the competitiveness of domestic enterprises,
leading to a negative impact on EG. Carkovic, M. and Levine, R. (2005) gave similar results
for 72 countries. Ang, J. B. (2009), using the VECM found the negative impact of FDI on EG.
Bouchoucha, N. and Ali, W. (2019) show a similar relationship in African countries
between 1996 and 2016.
Meanwhile, some empirical studies show that there is no relationship between FDI
and EG. Using the ARDL model, Karimi, M. S. et al. (2009) concluded that there was no link
between FDI and EG in Malaysia in 1970-2005. Temiz, D. (2014) came to the same
conclusion
2.2. The relationship between LF and EG
In Viet Nam, the concept of LF refers to the International Labour Organization's (ILO)
definition that classifies the working-age population, as those aged 15 years and over, and
the LF as those aged 15 years and over, in the previous week, who are working,
temporarily quit their jobs but have jobs and those who are unemployed and looking for
work.
Several empirical studies have shown a positive relationship between the LF and EG.
Research by Chirwa, T.G., & Odhiambo, N.M. (2017) in Zambia shows that in short and
long run, LF has a positive impact on EG. Dong, P. T., & Binh, D.H. (2019) gave the same
conclusion in Vietnam in the period 1996-2017. This is also the conclusion of Nguyen, H.
C., & Do, H. H. (2020) when researching in Vietnam in the period 1998 – 2018. Han, X
(2023) research in China in the period 2001-2020 shows that the LF is one of the
important drivers of the country's economic development.
However, there are some studies that show that the LF has the opposite effect or
no impact on EG. In the Harrod-Domar-Singer model of growth, a Keynesian approach,
population growth is thought to adversely affect growth. Since high population growth
will lead to a decrease in per capita and per capita savings, it will adversely affect the
growth process. Ahasan, U.H et al. (2019) studied in Bangladesh and found that both total
LF participation and female LF participation have significant positive impacts in the short
run on Bangladesh's economic development but negative impacts in the long run.

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