THE IMPACT OF FOREIGN DIRECT INVESTMENT AND GENETIC POPULATION AGING ON ECONOMIC GROWTH: AN EMPIRICAL STUDY IN VIETNAM

Abstract

This study aims to assess the impact of foreign direct investment (FDI) and population aging on economic growth in Vietnam in the period 1996 – 2024 using the Vector Error Correction Model (VECM). The results of the study show that FDI and population aging represented by average life expectancy both have a negative impact on long-term economic growth. In the short term, FDI has a negative and statistically significant effect on economic growth, while the average life expectancy has not shown a significant impact. In addition, the results of the variance decay show that shocks from FDI have a great influence on long-term economic growth fluctuations. From there, the study suggests that Vietnam needs to improve the quality of FDI attraction, strengthen the link between the FDI sector and domestic enterprises, and proactively adapt to the aging population to promote economic growth in the coming time.