The effect of economic policy uncertainty on the nexus between economic openness and economic growth: Evidence from Vietnam


Authors

  • Phan The Cong Thuongmai University
  • Pham Xuan Bac Dai Nam University
DOI: https://doi.org/10.57110/vnu-jeb.v5i5.479

Keywords:

Economic policy uncertainty, trade openness, FDI, economic growth

Abstract

Economic integration is an inevitable trend and can be seen as a critical path toward the growth and development of countries, especially developing countries. However, the large extent of openness in these economies also raises concerns about the effect when economic volatility occurs, especially when this impact can spread and lead to changes in the economic policies of countries. This paper aims to investigate the effect of economic policy uncertainty on the nexus between economic openness and economic growth in Viet Nam. Applying the ARDL and FMOLS method in the 1996-2022 data, the results show that economic policy uncertainty could hinder the positive effect of investment flows on economic growth, but conversely, it limits the negative impact of trade openness on growth. However, this result does not admit that economic policy uncertainty could have positive effects on growth. The hindrance of the impact of trade on economic growth could be beneficial in a period of persistent trade deficit, but moreover, it raises critical concerns as Vietnam's trade balance has improved and has maintained a continuous trade surplus in recent years. Thus, several implications have been proposed.

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Published

25-10-2025

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Phan The Cong, & Pham Xuan Bac. (2025). The effect of economic policy uncertainty on the nexus between economic openness and economic growth: Evidence from Vietnam. VNU JOURNAL OF ECONOMICS AND BUSINESS, 5(5), 39. https://doi.org/10.57110/vnu-jeb.v5i5.479

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