Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.Tác động của đầu tư công đối với đầu tư tư nhân: Nghiên cứu trường hợp các vùng kinh tế trọng điểm tại Việt Nam.
MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNNIVERSITY SUMMARY OF DOCTORAL THESIS IMPACTS OF PUBLIC INVESTMENT ON PRIVATE INVESTMENT: THE CASE OF KEY ECONOMIC REGIONS IN VIETNAM Major: International Economics Code: 9310106 HO THI HOAI THUONG HA NOI - 2023 The thesis is completed at Foreign Trade university Science Instructor: Assoc Prof Dr Nguyen Thi Thuy Vinh Reviewer 1: Reviewer 2: Reviewer 3: The thesis will be defended in front of the thesis committee at University level at Foreign Trade university At hour date month year 2023 The thesis can be consulted at the National Library and Library of Foreign Trade University INTRODUCTION Rationale of the research In the context of international economic integration, public investment has a great role in promoting economic development, especially in building socio-economic infrastructure, creating a favorable environment for business, and thereby improving the competitiveness of the private sector In addition, increasing public investment in socio-economic infrastructure is also one of the important factors attracting foreign direct investment (FDI) and increasing the country's development resources In Vietnam, the rapidly increasing scale of public investment has contributed to Vietnam's high growth for a long time Public investment is often referred to as “priming investment” to attract and lead private investment, create impetus for socio-economic development in localities and economic regions of the country In addition, Vietnam is integrating more deeply into the world economy by implementing a roadmap to reduce tariffs according to commitments At that time, to ensure growth, the Government needs to increase public investment in economic infrastructure (roads, bridges, ports ) and social infrastructure (schools, hospitals ) to improve the investment environment and business environment Currently, Vietnam has four key economic regions, including the Northern Key Economic Region, the Central Key Economic Region, the Southern Key Economic Region and the Mekong Delta Key Economic Region with a total of 24 provinces and cities The Government has identified these as the driving force behind the development of other regions across the country These are also key areas for public investment, private investment and contribute much to the country's economic growth Although playing a leading role in creating an infrastructure foundation to attract private investment in the region and the whole country, over the years, the role of public investment in key economic regions has been considered as weak (Tran Du Lich, 2021) In fact, public investment in infrastructure of key economic projects has made many achievements in creating a stimulus to attract private investment, especially in economic zones and industrial parks (Nguyen Thi Chinh, 2020; Nguyen Thi Thanh Huyen et al., 2022) However, in many cases, the attraction is not effective and has not created the motivation to attract private investment Specifically, the infrastructure of transport, seaports, railways and urban areas has not been synchronized due to lack of regulation and regional planning, so it has not been able to promote its advantages, efficiency and create guidance for the private sector (Tran Duy Dong, 2022) In addition, public investment puts great pressure on the state budget because the same key economic regions need a large resource to serve regional linkage investment projects, thereby creating a debt burden on the loan capital market and negatively affecting private investment (Do Thi Thanh Huyen et al., 2021) Therefore, whether public investment has a crowding - out or crowding – in effect on private investment in Key Economic Regions is still a controversial issue In addition, from the perspective of research, the impact of public investment on private investment is a topic of interest to many scientists, but the mechanism and results of the impact are controversial Many studies show that public investment has a crowding-in effect on private investment Specifically, adequate public investment in infrastructure improves market access, reduces production costs, and increases private investment (ASchauer,1989a; Saidjada et al., 2016; Makuyana, 2016 and Ouedraogo & associates, 2019) In addition, government investment in human capital (such as education and health), spending on research and development contribute to the formation of human capital, improve labor productivity and promote private investment (Lall, 2007; Daniele, 2009; Flores-Chamba & associates, 2019; Jena & Barua, 2020) However, other research suggests that public investment can have a crowding-out effect on private investment when large demand for government development investment may cause rising interest rates on the loan market to reduce private sector access to capital (Friedman, 1978; Ganelli, 2003; Kustepeli, 2005; Cavallo & Daude, 2011) In addition, raising taxes or borrowing to finance government spending also makes it difficult for the private sector to access the scarce financial resources of the economy (Pereira & Andraz, 2004; Drezgić, 2011; Rodríguez-Pose & et al., 2012; Solihin & associates, 2021) The impact of public investment on private investment is controversial in the short term and in the long term, as well as when considering the impact of components of public investment on the components of private investment (Pereira et al., 2001; Castillo & et al., 2005; Ngeendepi et al., 2021; Babu et al., 2022) Thus, in terms of research, the impact of public investment on private investment is one of the issues that causes a lot of debate and it is necessary to study this issue systematically and comprehensively Meanwhile, it can be seen that there are many studies on public investment and public investment efficiency in Vietnam (Nguyen Hong Thang, 2009; Hoang The Anh, 2014; Diep Gia Luat, 2015; Tran Vu Phong, 2018; Dao Thi Ho Huong, 2021; Pham Thi Thanh Binh, 2023) However, there is a lack of in-depth studies on the impact of public investment on private investment, especially empirical studies testing the crowding-out and crowding-in effects of public investment on investment in both the short and long term, or studies of the impact of public investment on specific components of private investment On the other hand, to the knowledge of the researcher, no research has been conducted in terms of qualitative and quantitative aspects for 24 provinces/cities in key economic regions Based on the theoretical and practical gaps mentioned above, the author selected “Impacts of public investment on private investment: The case of Key Economic Regions in Vietnam” as a research topic for the thesis Research objects and tasks 2.1 Research objects The research objective of the thesis is to analyze the impact of public investment on private investment in key economic regions in Vietnam In particular, the author proposes solutions to implement public investment to promote private investment in Vietnam’s key economic regions 2.2 Research tasks To achieve the above basic research objectives, the thesis will perform the following specific theoretical and experimental tasks First, provide the theoretical basis for public investment, private investment, channels of impact of public investment on private investment and the theory of key economic regions Second, analyze the actual impact of public investment on private investment in key economic regions In addition, test the impact of public investment on private investment in Vietnam’s key economic regions during the research period is based on quantitative analytical models Third, propose solutions to implement public investment to promote private investment in Vietnam’s key economic regions 2.3 Research questions The thesis aims to answer the following main research questions: First, is the impact of public investment crowding out or crowding in private investment, the components of private investment in key economic regions in Vietnam and whether this impact changes in the short term and long term? Second, how does public investment in infrastructure affect private investment in key economic regions in Vietnam? Third, how should public investment policies in key economic regions be implemented to promote private investment towards 2030? Object and scope of research 3.1 Research object The thesis studies the impact of public investment on private investment in key economic regions in Vietnam 3.2 Research scope Scope of content: The thesis studies the impact of public investment on private investment from the perspective of total public investment affecting the components of domestic private investment (investment in the household and private sectors) in Vietnam’s key economic regions Scope of time: The study uses the data covering the period from 2010 to 2021 Scope of space: The thesis studies the impact of public investment on private investment in key economic regions in Vietnam with 24 provinces/cities Research methods Qualitative research methods: the author employs the meta-analysis and descriptive statistics to synthesize previous research, complete the theoretical framework and serve as a basis for proposing policies in the thesis Quantitative research methods: the author uses Pool Mean Group estimator (PMG) to analyze the impact of public investment on private investment in key economic regions regarding the short run and the long run In addition, the author uses the noncausality test proposed by Juodis et al (2021) for panel data to examine the impact of public investment in infrastructure on investment for each region New contributions of the thesis 5.1 Theoretical contributions First, the thesis has synthesized and clarified theoretical issues about regions, economic regions and key economic regions At the same time, through the theoretical basis and previous empirical studies, the thesis has clearly indicated the impact channel of public investment on private investment Since then, the study has built a framework to analyze the impact of public investment on private investment Second, the thesis uses appropriate econometric models to assess the impact of public investment on investment private sector in key economic regions 5.2 Practical contributions First, through quantitative analysis, the thesis has shown the impact of public investment on private investment, private investment in the enterprise sector, and private investment in the household sector in the regions Second, from the analysis of quantitative results, the thesis proposes a policy of using public investment to promote private investment from the overall perspective of key economic regions At the same time, the thesis also proposes solutions for each key economic region, which are appropriate to the economic development situation, structure of public investment, private investment and orientation of public investment policy towards 2030 6 Structure of the thesis In addition to the introduction and conclusion, the thesis consists of chapters Chapter 1: OVERVIEW OF RESEARCH SITUATION Chapter 2: THEORETICAL BACKGROUND FOR THE IMPACT OF PUBLIC INVESTMENT ON PRIVATE INVESTMENT AND KEY ECONOMIC REGIONS Chapter 3: RESEARCH METHOD Chapter 4: SITUATION OF PUBLIC AND PRIVATE INVESTMENT IN VIETNAM ‘S KEY ECONOMIC REGIONS Chapter 5: QUANTITATIVE ANALYSIS OF THE IMPACT OF PUBLIC INVESTMENT ON PRIVATE INVESTMENT IN VIETNAM ‘S KEY ECONOMIC REGIONS Chapter 6: POLICY IMPICATIONS FOR IMPLEMENTATION OF PUBLIC INVESTMENT TO PROMOTE PRIVATE INVESTMENT IN VIETNAM ‘S KEY ECONOMIC REGIONS CHAPTER 1: OVERVIEW OF RESEARCH SITUATION 1.1 Research overview 1.1.1 Studies on the crowding-out effect of public investment on private investment First, studies analyze the crowding - out effect of public investment on private investment within a particular country, or group of countries (Pradhan et al., 1990; Bilgili 2003; Nazmi and Ramirez, 1997; To Trung Thanh, 2012) Second, the studies also separate public investment into investment categories and study the impact of those categories on private investment (Pereira, 2000; Rahman et al., 2015; Dada, 2013; Omotogun et al., 2018; Nguyen Thi Canh et al., 2020; Nguyen Thi Thuy Lien, 2022) Third, the studies also focus on the crowding - out effect of public investment on private investment in different sectors of the economy Fourth, studies show that the crowding - out effect of public investment on investment is still controversial when analyzing in the short and long term (Castillo et al., 2005; Mitra, 2006; Nguyen Thi Chinh, 2017; Mose et al., 2020; Nguyen Thi Thanh Huyen et al., 2022) 1.1.2 Studies on the crowding-in effects of public investment on private investment First, studies analyze the crowding – in effect of public investment on private investment within a country or a group of countries (Hatano, 2010; Naqvi, 2003; Erden and Holcome, 2005; Mitra, 2014; Abiad et al., 2016) Second, in addition to studies on the crowding – in effects of public investment on private investment from the perspective of total public investment, there are also studies on investment division The analysis of components by sector of investment and study of the effects of those components on private investment (Aschauer, 1989a; Xu and Yan, 2014; Saidjada et al 2016; Makuyana, 2016 and Ouedraogo et al., 2019) Third, some studies also analyze the crowding – in effects of public investment on private investment from the perspective of sectors (Saseed et al., 2006; Fujii et al., 2013; S Muthu, 2017; Nguyen Thi Thuy Lien, 2022) 1.2 Research gap 1.2.1 Research content First, there are currently very few studies on the impact of public investment on private investment at the economic region level, and in particular, there is no study analyzing the impact of public investment on private investment in key economic regions in Vietnam Second, there are quite a few studies on the impact of public investment on private investment However, there is a lack of in-depth studies on the relationship between public investment and private investment in Vietnam Third, there are currently very few studies that divide private investment into different components according to capital sources and specify the impact of public investment on those components 1.2.2 Research method First, most of the studies in Vietnam when studying from the perspective of provinces/cities use panel data series with methods such as VAR, POLS, FMOLS, DOLS Second, there are currently very few studies that clearly show the role of public investment in infrastructure on how private investment affects private investment, and there are no studies that clearly indicate the impact of this investment on investment of business and household sectors CHAPTER 2: THEORETICAL BACKGROUND FOR THE IMPACT OF PUBLIC INVESTMENT ON PRIVATE INVESTMENT AND KEY ECONOMIC REGIONS 2.1 The basics of public and private investment 2.1.1 Public investment 2.1.1.1 Definition a The concept of public investment in the world It can be seen that the concept of public investment in the world has three main points of view The first point of view emphasizes the owners of the capital of public investment The second view emphasizes the purpose of public investment The third 11 H2: Public investment has a crowding-in effect on private investment in the business sector in the long term H3: Public investment has a crowding-in effect on private investment in the household sector in the long term H4: Public investment has a crowding-out effect on total private investment in the short term H5: Public investment has a crowding-in effect on private investment in the household sector in the short term H6: Public investment a crowding-out effect on private investment in the business sector in the short term 3.2 Research model and data 3.2.1 Research model 3.2.1.1 Proposed research model The model in this study builds on the neoclassical theory of investment proposed by Jogenson (1963, 1967 and 1971) This model has recently been studied using panel data by Omotogun, O (2018), Omojolaibi et al (2016), Gérard Tchouass et al (2014), AltinGjini et al (2012) as follows: 𝑷𝑰𝒊𝒕 = 𝜶 + 𝜹𝑷𝑼𝒊𝒕 + 𝝋𝟏 𝑰𝑹𝒊𝒕 +𝝋𝟐 𝑮𝑹𝑫𝑷𝒊𝒕 + 𝝋𝟑 𝑰𝑵𝑭𝒊𝒕 + 𝝋𝟒 𝑭𝑫𝑰𝒊𝒕 + 𝝁𝒊𝒕 3.2.1.2 Basis of selecting research variables First, these are variables that reflect the main factors affecting private investment based on the investment theory and empirical research Second, besides gross local product (GRDP), inflation (INF), real interest rate (IR), the foreign direct investment (FDI) variable is added to the model based on the investment climate in key economic regions 3.3.2 Research data Data in the model is collected by year from the Statistical Yearbooks of the provinces in the key economic regions during the period 2010-2021 It includes total public investment capital (State sector investment - PU), total domestic private 12 investment capital (Non-state sector investment – PI including private investment in the enterprise sector (PIE) and private investment in the household sector (PIH)), total capital foreign direct investment (FDI), Gross Local Product (GRDP), Real Interest Rate (IR), Inflation (INF), Gross Regional Domestic Product (GRDP), Real Interest Rate (IR) are considered variables that represent the needs and costs of investment activities (Altin Gjini & Albania Agim Kukeli, 2012; Christian Dreger & Hans-Eggert Reimers, 2015) Research data related to investment capital and gross regional domestic product are calculated using 2010 comparative prices to eliminate the effects of inflation factor Variables are expressed in natural logarithm form Additionally, the variables are calculated in per capita form With this calculation, the values will be adjusted to suit the characteristics (population size) of the locality 3.3 Research method 3.3.1 Pooled mean group estimation method (PMG) The thesis uses panel data, which is a combination of cross-sectional data and timeseries data components In order to match the research data, the thesis uses an econometric model with the pooled mean group (PMG) estimator This method has the following advantages: (1) estimating for a single equation instead of estimating a system of equations; (2) using variables with different lags, regardless of the order of difference I (0) or I (1); (3) distinguishing short-term (different between groups) and long-term effects (homogeneous between groups) in the model (Pesaran et al., 1999, Samargandi et al., 2015) 3.3.1.1 Unit root test 3.3.1.2 Cointegration test 3.3.2 Non – causality test In addition, the thesis uses the non-causality test proposed by Juodis et al (2021) With the panel data in the model, the thesis uses non-causality test to investigate the impact of public investment in infrastructure on total private investment, private investment in the business sector and private investment in the household sector 13 CHAPTER 4: SITUATION OF PUBLIC AND PRIVATE INVESTMENT IN VIETNAM’S KEY ECONOMIC REGIONS 4.1 Overview of key economic regions in Vietnam 4.1.1 History of formation of key economic regions in Vietnam 4.1.2 Situation of economic development in Vietnam’s key economic regions 4.1.2.1 Size of GRDP and economic growth rate 4.1.2.2 Economic sector 4.2 Situation of public and private investment in Vietnam’s key economic regions 4.2.1 Situation of public investment in Vietnam’s key economic regions 4.2.1.1 Scale and growth rate of public investment 4.2.1.2 Components of public investment 4.2.2 Situation of private investment in Vietnam’s key economic regions 4.2.2.1 Scale and growth rate of private investment 4.2.2.2 Components of private investment 4.2.3 Situation of the relationship between public investment and private investment in Vietnam’s key economic regions 4.2.3.1 Proportion of public investment and private investment in the realized investment capital of the whole society In key economic regions, private investment accounts for a major proportion compared to public investment and foreign direct investment with an average proportion of 56,04%, higher than the national average of 51,7% Besides, key economic regions are gradually reducing their dependence on public investment capital due to attracting large amount of foreign direct investment (FDI) capital 4.2.3.2 The relationship between public investment and private investment in Key Economic Regions Based on the theoretical basis in Chapter and the role of foreign direct investment (FDI) in the total investment capital in key economic regions in Chapter 4, FDI is the factor that regulates the relationship between public investment and private investment 14 Therefore, the thesis will examine the relationship between public investment and private investment in the relationship with growth of FDI To further strengthen the relationship between public investment and private investment, the thesis calculates the investment attraction coefficient and set in relation to the growth rate of FDI to see the influence of international economic integration between public and private investment 4.2.3 Situation of implementing public investment policies to promote private investment in Vietnam’s key economic regions CHAPTER 5: QUANTITATIVE ANALYSIS OF PUBLIC INVESTMENT’S IMPACT ON PRIVATE INVESTMENT IN VIETNAM’S KEY ECONOMIC REGIONS 5.1 Statistical Description 5.2 Results of estimating the impact of public investment on private investment in Vietnam’s key economic regions 5.2.1 Diagnostic tests 5.2.1.1 Unit root test 5.2.1.2 Cointegration test 5.2.2 Results analysis 5.2.2.1 Long-term impact analysis Case 1: The long-term impact of public investment on total private investment 15 Table 1: Testing the long-term impact of public investment on private investment in key economic regions in the period 2010-2021 Dependent variable PMG PI Coefficient Standard deviation PU 0,368*** 0,032 GRDP 0,248** 0,020 FDI 0,099*** 0,029 INF -0,308** 0,463 IR -0,044*** 0,005 EC -0,316*** 0,089 No of observations 288 Note: *** represents the 1% significance level, ** represents the 5% significance level, * represents the 10% significance level Source: Author's calculation based on Stata-15 In the long run, all factors including public investment (PU), foreign direct investment (FDI), gross regional domestic product (GRDP), real interest rate (IR) and inflation rate (INF) have an impact on private investment PU, GRDP and FDI have positive effects while IR and INF have negative effects on private investment The noncausal test results show that public investment in infrastructure has a positive impact on private investment in all four key economic regions This is completely consistent with the theory of the crowding – in effect of public investment on private investment At the same time, the results are also consistent with the regression results on the impact of public investment on private investment in the long run in Key Economic Regions Case 2: The long-term impact of public investment on private investment in the business sector (PIE) and private investment in the household sector (PIH) 16 Table 2: Testing the long-term impact of public investment on private investment in the business sector (PIE) and the household sector (PIH) in key economic regions for the period 2010-2021 Dependent variable PIE PU Coefficient 0,415*** PMG Standard deviation 0,062 GRDP 0,136*** 0,032 FDI 0,037*** 0,030 INF -0,013*** 0,392 IR -0,075*** 0,012 EC -0,151*** 0,048 PIH Coefficient Standard deviation PU -0,036 0,038 GRDP 0,893*** 0,066 FDI 0,088*** 0,020 INF -0,422 0,311 IR -0,089*** 0,008 EC -0,340*** 0,085 Note: *** represents the 1% significance level, ** represents the 5% significance level, * represents the 10% significance level Source: Author's calculation based on Stata-15 The test results show that in the long run, public investment also has a crowding – in effect on private investment in the business sector (EC0) Specifically, a 1% increase in public investment will encourage private investment in the business sector to increase by 0,3% However, the test results show that in the long run, public investment does not have a crowding – in effect on private investment in the household sector in the long run (p-value >5%) The non-causality test results show that public investment in infrastructure has a positive impact on private investment in the business sector in four key economic regions This shows that, for the business sector, public investment in infrastructure plays a very important role in encouraging private investment 17 Table 3: Non-causality test on the impact of public investment in infrastructure on private investment in the business sector in key economic regions in the period 2010-2021 zNull hypothesis Coefficient P-value Conclusion statistics Public investment in 0,287*** 0,08 0,001 Reject H0 infrastructure has no impact on private investment in the business sector in the Northern key economic region Public investment in 0,291* 1,75 0,080 Reject H0 infrastructure has no impact on private investment in the business sector in the Central key economic region Public investment in 0,411** 2,48 0,013 Reject H0 infrastructure has no impact on private investment in the business sector in the Southern key economic region Public investment in 0,090** 1,42 0,042 Reject H0 infrastructure has no impact on private investment in the business sector in the Mekong Delta key economic region Note: *** represents the 1% significance level, ** represents the 5% significance level, * represents the 10% significance level Source: Author's calculation based on Stata-15 5.2.2.2 Short-term impact analysis Case 1: The short-term impact of public investment on total private investment 18 Table 4: Testing the short-term impact of public investment on private investment in key economic regions for the period 2010-2021 Region Northern Locality ΔFDI ΔGRDP ΔIR ΔINF Ha Noi 0,393 0,028 0,564*** -0,014 -0,067*** Hai Phong 0,105 0,152 0,989** -0,002 0,538 -0,222** 0,004 0,665 -0,008 0,423 0,281*** -0,331*** 0,053*** Quang Ninh 0,282** 0,321*** 0,163 *** 0,001 0,047 Vinh Phuc -0,185 -0,046 0,460 -1,221 Bac Ninh -0,185** -0,080*** 0,511** -0,089*** 1.268 Da Nang -0,165* 0,474*** 0,635*** -0,025 0,424 Quang Nam -0,692** -0,291** 1,826*** -0,032* -0,684* - 0,286 0,960*** 0,289 0,077 -0,905 -0,161 -0,074** -0,209 -0,003 -1,308 Thua Thien Hue 1,317 0,279 0,372 -0,311 -0,305* Ho Chi Minh 0,199 * 0,173** 0,508** - 0,074 -1,745*** 0,511*** 0,485** 0,002 -1,678 *** Hai Duong key economic Hung Yen region Central ΔPU key Quang Ngai economic region Binh Dinh Ba Ria – Vung Tau 0,361* Southther Tieng Giang n key Binh Phuoc -0,074*** -0,610*** 0,035** -0,236*** -0,228*** 0,185 -0,032*** -0,813*** -0,450*** -0,451*** 0,142** 0,031** -0,067*** -0,510*** 0,558** 0,937 -0,002 -0,336* Long An 0,429*** 0,626*** 0,790 0,014 0,050 Tay Ninh -0,101 0,198 0,245*** 0,032 -0,647 Binh Duong 0,239 -0,282* 0,093 0,006 0,098 Mekong Can Tho Delta Kien Giang 0,770 0,117 0,092 0,007 -0,199 -0,616*** 0,035 0,033** -0,062*** 0,593 -0,153 -0,016 1,510 -0,013** -0,872 -0,249 -0.124 0,483* 0,051 -0,305* economic region Đong Nai key Ca Mau economic region An Giang Note: *** represents the 1% significance level, ** represents the 5% significance level, * represents the 10% significance level Source: Author's calculation based on Stata-15 19 In general, in the short term, the impact of public investment (crowding-in and crowding -out effect) on private investment exists relatively clearly in localities, mostly in the Southern key economic region and the Northern key economic region Specifically, there are 6/8 localities in the Southern key economic region and 4/7 in the Northern key economic region, public investment has an impact on private investment in the short term For the remaining two key economic regions, public investment mainly does not affect private investment or has a crowding -out impact on private investment In addition, in localities where public investment has an impact on private investment, it can be seen that foreign direct investment (FDI) also affects private investment Besides, it can be seen that public investment has a crowding -out or no impact on nuclear cities in key economic regions except Ho Chi Minh City Case 2: The short-term impact of public investment on private investment in the business sector (PIE), private investment in the household sector (PIH) Table 5: Testing the short-term impact of public investment on private investment in the business sector (PIE) and the household sector (PIH) in Key Economic Regions Region Locality ΔPU -> ΔPIH Hà Nội -0,388 0,833* Hải Phòng -0,492 -0,782*** 0,601*** -0,025 0,353* 0,038 Quảng Ninh 0,329** 0,503*** Vĩnh Phúc -0,156 -0,195 Bắc Ninh -0,273** 0,492*** Đà Nẵng -0,383* 0,189 Quảng Nam -1,106*** 0,493 -0,340 -0,669 -0,481*** -0,273 Northern key Hải Dương economic Hưng Yên region Central key ΔPU -> ΔPIE economic region Quảng Ngãi Bình Định 20 Thừa Thiên Huế Souththern -0,442* 0,062 TP.Hồ Chí Minh 0,140* 0,418** Bà Rịa-Vũng Tàu 0,322* 0,551 Tiền Giang -0,606*** 0,042 -0,526*** -0,316*** -0,233*** 0,974*** Long An 0,596** 0,174*** Tây Ninh 0,068 0,165*** Bình Dương 0,253** 0,156 0,719 0,246 -0,833*** -0,005 0,340 0,058** -0,527 0,413*** key economic Bình Phước region Đồng Nai Mekong Delta Cần Thơ Kiên Giang key economic Cà Mau region An Giang Note: *** represents the 1% significance level, ** represents the 5% significance level, * represents the 10% significance level Source: Author's calculation based on Stata-15 ✓ Impact of public investment on private investment in the business sector First, the Southern, Northern and Central key economic region show a more obvious impact than the Mekong Delta key economic region Second, the main trend of the impact of public investment on private investment in the business sector is crowding-out Third, in Ho Chi Minh City and Ba Ria - Vung Tau, public investment, however, has a complementary impact on private investment in the business sector The crowding-out impact of capital shortages on the loan market can be reduced if there is a sufficiently large outflow of foreign investment (Dehn, 2000) At that time, interest rates will decrease and limit the crowding-out impact of public investment on private investment In addition, with localities with large FDI inflows, when combined with public investment for infrastructure, it creates a crowding-in impact on private investment in the business sector (Katherine, 2007; Barro, 1990; Rieber, 1999; Askandarou Diallo, 2021) 21 ✓ Impact of public investment on private investment in household sector First, the direction of the impact from public investment to private investment is a crowding-in effect in the short term Second, the subsidized impact of public investment on private investment is particularly pronounced in the key economic regions, with the exception of the Central For the Mekong Delta key economic region, this is a region with a higher proportion of agricultural sector compared to the rest of key economic regions For that reason, localities in the region prioritize the allocation of public investment capital for the agricultural sector, thereby promoting households in the agricultural sector to increase investment For the Northern key economic region, where more than one-third of the country's craft villages are concentrated, public investment also shows a crowding-in impact on private investment from the household sector in the short term For the Southern key economic region, the localities have a large proportion of FDI capital compared to the other key economic regions Therefore, in some localities, public investment has a crowding-in impact on private investment from the household sector For the Central key economic region, there is no evidence of public investment impacting private investment in the household sector in the short term CHAPTER 6: POLICY IMPICATIONS FOR IMPLEMENTATION OF PUBLIC INVESTMENT TO PROMOTE PRIVATE INVESTMENT IN KEY VIETNAM’S ECONOMIC REGIONS 6.1 International context and domestic context 6.1.1 International context 6.1.2 Domestic context 6.1.2.1 The opportunities 6.1.2.2 The challenges 6.2 Policy orientations on public investment in Vietnam’s key economic regions towards 2030 6.2.1 Policy orientations on public investment for the entire key economic regions 6.2.2 Policy orientation on public investment for each key economic region 22 6.3 Policy implications for implementing public investment to promote private investment in Vietnam’s key economic regions 6.3.1 Policy implications for the entire key economic regions 6.3.1.1 Policy implications of promoting the crowding – in impact of public investment on private investment First, increase public investment in infrastructure to promote private investment Second, focus public investment capital to support private investment from the household sector in the short term and promote the transformation of a large enough household business model into a business model in Key Economic Regions in the long term Third, promote effective public investment activities in the cores of each key economic region to create a crowding – in impact on private investment as well as create spillover effects on private investment in neighboring localities 6.3.1.2 Policy implications of limiting the crowding – out impact of public investment on private investment First, increase the attraction and selection of FDI projects in the areas of strength of the localities in the region Second, develop the credit market on the basis of encouraging the participation of all sectors and diversifying credit instruments 6.3.2 Policy implications for each key economic region 6.3.2.1 Northern Key Economic Region First, concentrate public investment capital to build transport infrastructure to support the formation of nuclear and satellite urban structures in order to promote the crowding – in effect of public investment to private investment in local localities Second, increase public investment capital to support craft village business households in the short term with the aim of transforming into a business model in the long term, increasing the crowding – in impact of public investment on private investment in the region Third, strengthen the attraction and selection of FDI projects in the manufacturing and processing industry in order to limit the crowding - out impact and increase the crowding – in impact of public investment on private investment in the long term 23 6.3.2.2 Central Key Economic Region First, concentrate public investment capital to complete the North-South expressway and the coastal route, further promote the connection on the "horizontal axis" to increase the crowding – in effect of public Second, support private investment from the business sector to limit the crowding -out impact of public investment in the short term Third, strengthen the attraction and selection of FDI projects in the resort real estate sector in order to increase the crowding – in impact and limit the crowding – out impact of public investment on private investment in the long term 6.3.2.3 Southern Key Economic Region First, concentrate public investment capital in building modern digital infrastructure, among the top countries in the region, and perfect the infrastructure of industrial zones in order to increase the crowding – in impact of public investment on private investment Second, effectively manage government’s loans for public investment to limit the crowding – out effect on private investment in the short term Third, develop capital market to reduce pressure on bank credit to limit the crowding out impact of public investment in the short term Fourth, strengthen the attraction and selection of high – tech FDI projects in such areas like automation, robot application and artificial intelligence to increase the impact of crowding – in effect and limit the crowding – out effect of public investment on private investment in the long term 6.3.2.4 Mekong Delta Key Economic Region First, focus public investment on waterway transport infrastructure Second, increase public investment in supporting the transformation of agricultural production model towards sustainability and linkage with businesses in order to increase the crowding – in impact of public investment on private investment in the local areas Third, increase the attraction and selection of FDI projects in high-tech agriculture to enhance the impact of crowding – in effect and limit the crowding -out impact of public investment on private investment in the long term 24 CONCLUSION The thesis uses the PMG method to analyze the short-term and long-term impacts of public investment on private investment This method allows for short-term parameters to differ between groups while constraining long-term parameters to be uniform across subgroups Therefore, the advantage of PMG is that it allows to distinguish short-term (difference between groups) and long-term (homogeneous between groups) This is one of the new points about the research method of the thesis compared to previous research works From the results of the regression model, combined with the implementation of public investment, private investment as well as public investment policy in key economic regions, the thesis proposes solutions to effectively use public investment, thereby promoting private investment in all key economic regions and in each key economic region Besides the new contributions, the thesis still has the following limitations First, data on private investment focuses on businesses and households in general, not specifically analyzed by economic affairs Therefore, some policy impications on investment of the business and household sectors are not detailed Second, the solution related to foreign direct investment (FDI) in chapter is not really comprehensive because it has been partly based on qualitative research The author hopes that these limitations will bring some future research directions as follows First, the thesis will survey households as well as the business sector according to economic affairs in key economic regions Second, the thesis will synthesize data on foreign direct investment (FDI) through investment fields in key economic regions, which is generated by the Department of Planning and Investment in the local areas LIST OF PUBLICATIONS No Title of Paper The direct and spill - over effect of public investment on economic growth and convergence in the Southern Key Economic Region: An application of spatial regression model The impact of public investment on private investment in Vietnam’s Central Key Economic Region and the Mekong Delta Key Economic Region: a PMG approach Time Publisher Author 2022 VEAM International Conference First Author 2022 CIEMB International Conference First Author ISBN: 978-604330-515-9 ICSEED International Conference Analyzing the impact of public investment on private investment in the Central Key Economic Region 2023 The situation of investment in the Mekong Delta Economic Region 2022 Asia-Pacific Single Author Economic Review Analyzing the impact of public investment on private investment in the Central key economic region 2022 Vietnam Journal of Economics and Finance Single Author 2022 Journal of Economics and Management First Author Accepted for publication on July 20, 2023 Thailand and The World Economy Journal (SCOPUS Q4) First Author The direct and spill - over effect of public investment on economic growth and convergence in the Southern Key Economic Region: An application of spatial regression model The impact of public investment on private investment in Vietnam’s Central Key Economic Region and the Mekong Delta Key Economic Region: a PMG approach Single Author ISBN: 978-60479-3740-0