The Triangular Causal Relationship between Economic Growth, Tourism, and Foreign Direct Investment: A Case Study in Central Vietnam

Abstract

The article proposes a method to broach the complication and mixture of the triangular causal nexus among gross domestic product (GDP), foreign direct investment (FDI), and foreign tourist arrivals (FTA) in Thua Thien Hue (TTH) province that has not yet been studied. FDI into TTH province fluctuates unpredictably, so the study investigates the causal relationship between the triangular variables over the whole period (1995–2019) and the shortened period (2003–2019). The ARDL model is the most optimal choice due to the heterogeneity of stationary characteristics and short time series data. The shortened period has established more statistically significant short- and long-term Granger causal relationships, excluding the economic crisis effect. The Granger causality test only underlined a unidirectional short-term relationship running from FTA to FDI in the shortened period. Policies for economic development in TTH province need to strengthen the coordination between foreign investment and tourism so that all economic sectors can jointly create spillover effects on economic growth.

Examining the relationship between tourism, trade, and income: evidence from Vietnam

“…Very few studies assess the interaction between tourism demand and macroeconomic variables in Vietnam. The limited studies include Selvanathan et al (2021), Puah et al (2019), Ngo & Ha (2022), and Le, Nguyen, and Tran (2022). In particular, Selvanathan et al (2021) explain why Vietnam is a favorite destination using exchange rate variables and commodity price differentials between Vietnam and other countries.…”

“…They find a positive and robust interaction between tourism demand, economic growth, and the real exchange rate. A study by Le et al (2022) evaluates the triangular causal relationship between economic growth, tourism, and economic growth in central Vietnam and finds that there are two-way short-and long-term causal interactions between foreign tourist arrival and economic growth. Although the previous studies have used macroeconomic variables as determinants of tourism demand for Vietnam, none of them has accounted for trade as a determinant of tourism demand in Vietnam.…”

Analysing the Scope of Local Authorities (LAs) in Facilitating and Influencing the Sustainability of Foreign Direct Investment in Namibia: A Case Study of the Windhoek and Walvis Bay LAs

“…The need for facilitating FDI is in light of the developmental prospects they bring. As opposed to the old paradigm that emphasised FDI attraction on the principle of quantity, the new approach looks at the quality dimension of foreign investors [53]. Notably, the quality dimension is largely underpinned by the sustainability orientation of foreign investors towards host communities as influenced by host IFAs.…”

“…In contrast, the bottom-up approach to development in Namibia has been embraced in several legislations (that is, Decentralisation Policy, Vision 2030 and the National Development Plans (NDPs); the Namibian government has decentralised FDI facilitation but to a very limited extent. This is particularly due to Sections 35,44,53 and 94 of the amended LAs Act (Act No. 23 of 1992) that empowers LAs to facilitate and aid FDIs by providing them with land, water, electricity and waste management services [9].…”

Assessing the Global Drivers of Sustained Economic Development: The Role of Trade Openness, Financial Development, and FDI

“…Their study observed that FDI exerts both direct and indirect positive effects on economic growth. LE, et al [41] applied provincial data, from 1997 to 2019 in Vietnam, using the vector autoregression (VAR) and ARDL estimators and found that economic growth positively influences economic growth, but FDI does not influence economic growth. On the contrary, Joshua [42] applied the ARDL approach to examine the nexus between FDI and economic growth in Nigeria, from 1981 to 2016, and found that FDI exerts a positive but insignificant effect on economic growth in both the long and short runs.…”