NguyenThiThuHa TV pdf UNIVERSITY OF PÉCS FACULTY OF BUSINESS AND ECONOMICS DOCTORAL DISSERTATION Nguyen Thi Thu Ha Pécs, 2018 UNIVERSITY OF PÉCS FACULTY OF BUSINESS AND ECONOMICS Nguyen Thi Thu Ha THE[.]
UNIVERSITY OF PÉCS FACULTY OF BUSINESS AND ECONOMICS DOCTORAL DISSERTATION Nguyen Thi Thu Ha Pécs, 2018 UNIVERSITY OF PÉCS FACULTY OF BUSINESS AND ECONOMICS Nguyen Thi Thu Ha THE IMPACT OF POPULATION AGEING, ECONOMIC GROWTH ON PRIVATE SAVINGS IN VIETNAM DOCTORAL DISSERTATION Supervisor: Dr Kőrősi Gábor Pécs, 2018 ACKNOWLEDGEMENTS PhD study is a journey that taught me to become an independent researcher For me, a completed thesis does not represent a high level of competence in doing research, however it is indicative of my confidence in conducting an academic research For three and a half years, I enjoyed the valuable academic experiences from University of Pécs and an interesting life in Pécs, Hungary Throughout my journey, I have been surrounded by guidance, support, sympathy, and care of many wonderful people, therefore I would like to take this opportunity to express my sincere gratitude to them all First of all, I would like to express my deepest respect and gratitude to my supervisor, Professor Kőrősi Gábor I have been extremely lucky to receive supervision from his highly experienced professor in his academic field Professor Kőrősi Gábor, I would like thank you very much for sharing great ideas and giving me much support throughout my candidate milestones I appreciate your enthusiasm in reading my thesis drafts with valuable comments that I could learn from Your valuable and incessant support encouraged me to believe that only through hard work and persistence you can see optimism in your future I have a great pleasure to extend special thanks to Head of Doctoral School of Business Administration, Faculty of Business and Economics, University of Pécs, Prof Iván Bélyácz, his dedication, wisdom and sapience have been a permanent support making possible for me to overcomes the difficulties in meeting the doctoral school requirements in due terms, in a prestigious university such as the University of Pécs, Hungary Dear Professor, I appreciate your great help motivating me to intensify the scientific work to obtain this outcome Thank you, Professor Iván, your attention, care and patience have accompanied me throughout the cycle of study Also, a heartfelt gratitude goes to the professors of Doctoral School, University of Pécs: Dr Ferenc Farkas†, Dr Vital Zsuzsanna, Dr Rekettye Gábor, Dr Barakonyi Károly, Dr Zeller Gyula, Dr Vưrưs József, Dr Szerb László, Dr John R Schermerhorn, Galambosné Dr Tiszberger Mónika, Dr Kovács Kármen, Dr Komlósi Sándor, Dr Gngyi Bugár, Dr Tưrưk Ádám, Gyarmatiné Dr Bányai Edit, Dr Kruzslicz Ferenc, Dr Veres Zoltán for the knowledge and the professional competence they transferred in me during all the study cycle I am blessed and I rejoice having shared this experience, this delightful and demanding dream that many would have wished to be part i I want to extend my gratitude to Ms Kohlmann Gabriella and other staffs of Doctoral School, University of Pécs for their willingness and an availability in providing the necessary information throughout the study period I am grateful to the Stipendium Hungaricum Scholarship Programme, the Hungarian Government and the Ministry of Education and Training of Vietnam for providing me with a much desired scholarship Without the financial support, it would have been difficult for me to pursue a PhD degree in one of the most prestigious universities in Hungary Many big thanks to my lovely colleagues from the Faculty of Economics - University of Economics, The University of Danang, who helped to deliver my lectures and perform my duties for more than three years of my absence Having them made me completely feel at ease with my study I would like to expand the acknowledgement to my friends for their wholehearted support during my PhD journey I sincerely thank my friends in Hungary for the happy moments we have had together Special thanks to a pretty girl and roommate, Tu Anh for her caring, sharing and listening Many thanks to my best Vietnamese friends, Quynh Anh, Tu Anh, Huu Vuong, Thai Hoa, Nhat Khue, who shared the house with me, for their sharing They are not only friends but parts of a big family as well Having you, my study was more enjoyable and less stressful And the most importantly, though never enough, I still would like to say thanks to my parents, Dad Toan and Mon Kiem and parents-in-law, Dad Mang and Mon Thanh for their care and encouragement Dad Toan and Mon Kiem always stand by my side sharing happiness and sorrows, raising me up in difficult times and looking forward to having me home I hope I have made you feel proud when reaching the finish line successfully Finally, I dedicate this thesis to my faithful husband, Lam Ba Hoa Thank you for being by my side during the ups and downs of my PhD journey Thanks for your love, share and care I am very proud to be your wife! Thank you very much and best wishes to you all! Sincerely, Nguyen Thi Thu Ha ii TABLE OF CONTENTS ACKNOWLEDGEMENTS - i LIST OF FIGURES - vi LIST OF TABLES vii CHAPTER INTRODUCTION 1.1 Significance of the study - 1.2 Statement of problem - 1.3 Research aims and objectives - 1.4 Research questions and hypotheses 1.5 The structure of research - CHAPTER LITERATURE REVIEW - 2.1 The definition of population ageing - 2.2 The definition of private savings - 2.3 The Life Cycle Hypothesis and related literatures - 10 2.3.1 The Life Cycle Hypothesis - 10 2.3.2 The savings rate (SR) in the Modigliani’s simplified model 12 2.3.3 The relationship between population ageing and private savings rate 15 2.3.4 The relationship between economic growth and private savings - 35 2.4 Summary - 47 CHAPTER POPULATION AGEING, ECONOMIC GROWTH AND PRIVATE SAVINGS IN VIETNAM IN THE PERIOD 1985 - 2016 - 49 3.1 A brief review of population ageing in Vietnam - 49 3.1.1 Decreasing fertility rate - 51 3.1.2 Increasing longevity - 52 3.1.3 The pace of population ageing - 54 3.1.4 The dependency ratio and potential support ratio 55 3.2 Overview of Vietnam’s economic growth 59 iii 3.2.1 Vietnam’s economy between 1976 and 1985 after the country’s reunification 59 3.2.2 The period 1985 - 1988: Doi moi (renovation) policy and initial adjustments towards a market economy 62 3.2.3 The period 1989 - 1996: Early transformation to the market mechanism - 63 3.2.4 The period 1997 - 1999: Transformation in the context of the Asian crisis 64 3.2.5 The period 2000 - 2007: Overcome the financial crisis and further growth 65 3.2.6 From 2007 onwards: Globalization and a stabilized growth - 65 3.3 The Vietnamese pension schemes 66 3.3.1 The Vietnamese pension scheme: Current situation and its challenges in the context of a rapidly ageing population - 67 3.4 A brief view of dependency ratios, economic growth, and private savings in Vietnam 76 CHAPTER RESEARCH METHODOLOGY 78 4.1 Research approach - 79 4.2 Research methodologies 80 4.2.1 The quantitative research and the qualitative research 80 4.2.2 Selecting a research strategy - 81 4.3 Data collection and model specification - 81 4.3.1 Data collection 81 4.3.2 Model specification 83 4.4 Research techniques - 84 4.4.1 Unit root tests for stationarity 85 4.4.2 The Vector Autoregressive (VAR) model - 88 4.4.3 The cointegration test 89 4.4.4 Vector Error Correction Model (VECM) - 97 4.4.5 The Granger Causality test and the Block Exogeneity Wald test - 99 4.4.6 Impulse response function and variance decomposition 100 4.4.7 Diagnostic test for Ordinary Least Square (OLS) model - 101 4.5 Summary - 103 CHAPTER RESEARCH RESULTS AND DISCUSSIONS - 104 iv 5.1 The impact of population ageing on private savings in Vietnam - 105 5.1.1 Correlation matrix and descriptive statistics 105 5.1.2 Graphical data analysis 107 5.1.3 Unit root tests for the variables in Model - 109 5.1.4 The Johansen cointegration test for Model - 111 5.1.5 The Vector Error Correction Model (VECM) for Model 113 5.1.6 Granger causality test 123 5.1.7 Impulse response function and variance decomposition for Model 125 5.1.8 Diagnostic tests for the residuals in the dynamic VECM1 - 127 5.2 The impact of economic growth on private savings in Vietnam 129 5.2.1 Correlation matrix and descriptive statistics 129 5.2.2 Graphical data analysis 130 5.2.3 Unit root tests for the variable in Model - 132 5.2.4 The Johansen cointegration test for Model - 134 5.2.5 Vector Error Correction Model (VECM) for Model 135 5.2.6 Granger causality test for Model 142 5.2.7 Impulse response function and variance decomposition for Model 144 5.2.8 Diagnostic tests for the residuals in the dynamic VECM2 - 146 5.3 Summary - 147 CHAPTER CONCLUSION AND POLICY IMPLICATIONS - 151 6.1 Summary of the study and conclusion - 151 6.2 Policy implications and recommendations 157 6.3 Limitations of the study and areas for further study - 161 REFERENCES - 163 APPENDIX 1: Variance Decompositions for Model - 178 APPENDIX 2: Variance Decompositions for Model - 179 v LIST OF FIGURES Figure 3.1: The total fertility rate (TFR) in Vietnam during the period 1979 - 2016 - 51 Figure 3.2: Decreasing fertility and increasing longevity in Vietnam, 1950-2050 52 Figure 3.3: TFR and life expectancy at birth in Vietnam in the period 1979 - 2016 53 Figure 3.4: Population size and the ageing index in Vietnam, 1999 - 2016 54 Figure 3.5: The total dependency ratio in ASEAN countries in 2015 - 56 Figure 3.6: The dependency ratios in Vietnam in the period 1979 - 2016 56 Figure 3.7: Projected indicators of the dependency ratio and the support ratio in Vietnam during the period 1980 - 2035 - 57 Figure 3.8: Changes in population age structure in Vietnam in the period 1979 - 2016 58 Figure 3.9: Real GDP (billions VND), real GDP per capita (thousands VND) and GDP growth rate of Vietnam in the period 1979 - 2016 - 59 Figure 3.10: Private savings rate (% of GDP) in Vietnam in the period 1979 - 2016 - 76 Figure 3.11: Dependency ratios, GDP growth rate, and private savings rate in Vietnam, 1979 - 2016 77 Figure 5.1: Trends in the variables in Model during the period 1985 - 2016 107 Figure 5.2: Impulse response function for Model 126 Figure 5.3: The stability of the residuals in Model 128 Figure 5.4: Trends in the variables in model 131 Figure 5.5: Impulse response function for Model 144 Figure 5.6: The stability of the residuals in Model 147 vi LIST OF TABLES Table 2.1: The summarized results of previous researches on the association between dependency ratios and savings rate - 30 Table 2.2: The summarized results of previous researches on the relationship between economic growth and private savings 42 Table 3.2: Number of participants in the period 1995 - 2008 68 Table 3.3: Contribution rates to the pension scheme 71 Table 3.4: The ratio between total revenue and total expenditure of the pension system in Vietnam during the period 2000 - 2016 73 Table 3.5: The estimated pension debts in Vietnam in the period 2000 - 2050 76 Table 5.1: Correlation matrix between the variables in Model 106 Table 5.2: Descriptive statistics in Model - 106 Table 5.3: The results of the ADF and PP unit root tests in Model - 110 Table 5.4: AIC and SC for the optimal lag length in the unrestricted VAR model - 112 Table 5.5: The Johansen cointegration test results for Model 112 Table 5.6: The first normalized long run cointegration equation for Model - 113 Table 5.7: The results of the short run Vector Error Correction Model for Model - 120 Table 5.8: The Pair-wise Granger Causality test results for Model - 124 Table 5.9: The results of VEC Granger Causality/Block Exogeneity test for Model - 125 Table 5.10: The results of diagnostic tests for the residuals in VECM1 127 Table 5.11: VEC residual serial correlation LM test results for Model - 128 Table 5.12: Correlation matrix between the variables in Model - 129 Table 5.13: Descriptive statistics in Model - 130 Table 5.14: The results of the ADF and PP unit root tests in Model 133 Table 5.15: AIC and SC for the optimal lag length in unrestricted VAR model 134 Table 5.16: The Johansen cointegration test results for Model 134 Table 5.17: The first normalized long run cointegration equation for Model 135 Table 5.18: The results of the short run Vector Error Correction for Model - 140 Table 5.19: The Pair-wise Granger Causality test results for Model 142 Table 5.20: The results of VEC Granger Causality/Block Exogeneity test for Model - 144 vii