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FDI attraction into Vietnam in recent years has also been associated with transfer pricing
and limitations in technology transfer.
Meanwhile, in the long run, LF will have a positive impact on EG in Vietnam. This
finding is shown in the study of Chirwa, T.G., & Odhiambo, N.M. (2017), Dong, P. T., &
Binh, D.H. (2019), Nguyen, H. C., & Do, H. H. (2020), Han, X (2023). The period 1996-2024
shows that Vietnam is in the golden age. This gives Vietnam the advantage of young,
abundant and cheap labor. These are the conditions for the development of labor-
intensive economic sectors.
In the above research results, innovation is not statistically significant in the long
term. This result is consistent with the research of Law, S. H. et al. (2020), Pham, T.C
(2025). This implies that, although innovation is expected to be an important driver of
growth, during the research period, innovation has not shown a clear role in boosting
GDP. The reason is that over the years, Vietnam has had a very low success rate for both
intellectual property commercialization and research and development (R&D)
commercialization
The results also show that, in the long term, EG will need to be adjusted upwards by
about 0.028971% to return to the equilibrium position.
4.4. VECM model estimation results
- Determine the optimal lag:
Table 6. VAR Lag Order Selection Criteria

Lag LogL LR FPE AIC SC HQ

0 255.2365 NA 4.75e-14 -19.32588 -19.13233* -19.27015*
1 273.3184 29.20933* 4.13e-14* -19.48603 -18.51827 -19.20735
2 289.6184 21.31536 4.46e-14 -19.50911* -17.76713 -19.00748

Source: Research results from Eview 10
This study uses the AIC criterion to determine the latency of the VECM model. The
results in table 6 show that the optimal latency of the model is 2
- VECM results:
Table 7. VECM Error Correction Estimates results
D(LGDP(-1)) D(LFDI(-1))*** D(LLB(-1))** D(LINN(-1)) C
1.000000 -0.131336 0.935433 0.020601 -0.016915
-0.02023 -0.3743 -0.02429
[-6.49096] [ 2.49918] [ 0.84798]
Source: Research results from Eview 10
From the VECM estimation results in Table 7, the short-term relationship
between the variables is shown in the following equation:
LGDP = -0.016915- 0.131336* LFDI + 0.935433 * LLB + 0.020601* LINN+ ε
In the short-term, two variables LFDI, LLB are statistically significant. FDI has a
negative impact on EG in Vietnam. This is also the opinion of Ang, J. B. (2009),
Bouchoucha, N., Ali, W. (2019) and Muhammad Shahid (2014). Meanwhile, LF has a
positive impact on GDP EG in Vietnam. This research result is consistent with the research
of Chirwa, T.G., & Odhiambo, N.M. (2017), Dong, P. T., & Binh, D.H. (2019), Nguyen, H. C.,
& Do, H. H. (2020), Han, X (2023). Besides, innovation is not statistically significant. This

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