The Relationship between Economic Growth and FDI: Evidence from Nam Dinh Province in Viet Nam

The purpose of this study is to examine the relationship between economic growth and foreign direct investment (FDI) in Nam Dinh province for the period 1987-2019. The paper uses a Vector Autoregression model (VAR) to process the time-series data set. Moreover, the Granger causality test was done via four economic variables, namely gross regional domestic product (GRDP), foreign direct investment (FDI), the labor force (LF) and openness of the economy (OPEN). The empirical results show that GRDP positively effects on FDI at lag 1 while only FDI in the previous two years is considered as effecting on current economic growth at 10% statistically significant. Eventually, the paper suggests some policy implications for attracting more FDI for further supporting economic growth in Nam Dinh province.