The Impact of Public Expenditure on Economic Growth of Provinces and Cities in the Southern Key Economic Zone of Vietnam: Bayesian Approach

Abstract

This study assesses the impact of public expenditure on the economic growth of the Southern Key Economic Zone (SKEZ) of Vietnam. The results, using data of 8 provinces and cities of SKEZ from 2005 to 2016, by following the Bayesian approach and Gibbs sampling algorithm, show that the larger scale of the public expenditures, the greater the economic growth rate, while the private investment sector in the provinces and cities in SKEZ is ineffective. In addition, the article also shows that foreign direct investment, and the population growth rate of provinces and cities have a positive impact on the economic growth of SKEZ. The factors that have a negative impact on the economic growth of the provinces and cities in SKEZ are the size of the labor force and the import-export ratio.