Thesis summary: The impacts of external debt to Vietnam’s economic growth

The overall objective of the thesis is to assess the impact of external debt on Vietnam''s economic growth by quantitative research model. To achieve the above objectives, the thesis will focus on two specific objectives.

MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM BANKING UNIVERSITY HO CHI MINH CITY ***** NGUYEN XUAN TRUONG THE IMPACTS OF EXTERNAL DEBT TO VIETNAM’S ECONOMIC GROWTH Major: Finance – Banking Code: 9.34.02.01 THESIS SUMMARY HO CHI MINH CITY – 2019 MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM BANKING UNIVERSITY HO CHI MINH CITY ***** NGUYEN XUAN TRUONG THE IMPACTS OF EXTERNAL DEBT TO VIETNAM’S ECONOMIC GROWTH Major: Finance – Banking Code: 9.34.02.01 THESIS SUMMARY ACADEMIC ADVISOR ASSOCIATE PROFESSOR., PHD LE PHAN THI DIEU THAO HO CHI MINH CITY – 2019 ABSTRACT Vietnam is a developing country and needs huge capital to build infrastructure and invest in development However, Vietnam has a high budget deficit, low rate of income, saving rate and foreign exchange reserves, resulting in insufficient resources for investment Therefore, foreign loans are one of the important resources to offset the shortage of national development, contributing to catch up with other countries in the world However, more and more foreign loans help the Vietnamese economy grow high because every year the Government has to spend nearly 25% of its budget to pay debt? How does foreign capital affect investment, consumption and trade as well as the economic growth of borrowing countries? The study examines the impact of external debt on Vietnam's economic growth using a quantitative approach based on MIDAS The results of the study show the positive impact of external debt on economic growth during the study period In addition, the variables of economic openness, exchange rate as well as inflation also impact on economic growth In addition, the study used the VECM quantitative approach to examine and assess the impact of external debt thresholds on economic growth The results show that there is a external debt threshold in the study period This is an important basis for making policy recommendations in the management and use of Vietnam's external debt in the future In summary, the study is an empirical evidence to illustrate the positive impact of Vietnam's external debt, which provides policy recommendations to managers and policymakers on this issue Keywords: external debt, economic growth, Vietnam CHAPTER INTRODUCTION 1.1 The necessity of the study From a theoretical and practical point of view, the relationship between external debt and economic growth is a subject of much interest to researchers Theories of external debt and economic growth focus on explaining this relationship based on dynamic economic models in open economies, with one side borrowing external debt to develop the economy Use external savings to invest in the economy This is more and more true for developing countries when they use abundant external resources and modern technology to shorten development time in the hope of escaping poverty, catching up with developed countries, and increasing incomes for people However, the other side is the problem of the efficiency of using loans and increasing the debt obligations in the future when increasing foreign loans for investment This brings risks to the borrowing countries in the process of economic development as countries borrow heavily from outside will lead to a buildup of rising interest payments resulting in reduced investment, reduce social welfare The question is whether increasing external debt will increase economic growth or vice versa as debt obligations increase In other words, external debt can have a negative impact on economic growth due to the accumulation of debt obligations, which makes countries unable to pay their debts How does this issue in Vietnam during the open period of implementing economic reform is a matter of concern for research 1.2 Background of the study Studies by Cohen (1993), Deshpande (1997), Krugman (1998), Sachs (1989), Chowdhury (2001), Pattillo (2004) supported this theory through a number of empirical studies The high level of external debt brings uncertainty to the economy due to the inefficient allocation of capital, focusing on short-term and highrisk projects However, studies by Frimpong and Abayi (2006), Daud et al (2013), Korkmaz (2016) show that the positive effects of external debt on economic growth reinforce the basis for mentioned above Quantitative studies mainly use VECM, ARDL, GMM models with variables of the same frequency (Winston and Chrystol, 2010) For empirical studies on the impact of external debt on Vietnam's economic growth, Nguyen Hoang Bao and Doan Kim Thanh (2009), Nguyen Huu Tuan (2012) and Nguyen Ngoc Thach and Tran Thi Kim Oanh (2016) using the VECM, GMM models are consistent with previous studies on external debt However, studies on Vietnam have a small number of observations (less than 30 observations) or a varied study period Based on the abovementioned theoretical and practical analyzes, the thesis found no study on the impact of external debt as well as some macro variables (openness, exchange rates, inflation) to Vietnam's economic growth based on the combination of different frequency data in the research model Previous research models mainly used the ARDL, VECM model for variables with the same frequency (Moore and Thomas, 2010) Therefore, studying the impact of external debt on Vietnam's economic growth on the basis of combining variable frequency studies with the MIDAS method is the research gap of the thesis 1.3 Objectives of the study The overall objective of the thesis is to assess the impact of external debt on Vietnam's economic growth by quantitative research model To achieve the above objectives, the thesis will focus on two specific objectives: (i) Empirical assessment of the impact of this external debt on Vietnam's economic growth by quantitative models with macroscopic data published publicly by international organizations (ii) Analyze the relationship between external debt and economic growth to determine the external debt threshold for Vietnam 1.4 Scope of the study The subject of the thesis is the impact of external debt on Vietnam's economic growth in the period 2000-2016, data are collected quarterly 1.5 Methodology and data of the study To assess the impact of external debt on economic growth from a quantitative perspective on these two research questions, the thesis uses two research models: (i) Ghysels et al (2002, 2006) used the estimation of the linear effects of external debt on economic growth MIDAS (Mixed-Data Sampling) has the advantage of evaluating input time series data at different frequencies through linear regression (ii) Estimation methods using the Vector Error Correction Model (Johansen) (1991) were used in the thesis to assess the impact of the external debt threshold on economic growth The VECM model was developed from the Vector Autoregressive Model (VAR) based on the addition of error correction components to the model Data used in the study are macro data published by international organizations such as WB, IMF, ADB and GSO 1.6 Results and novelty of the study Empirical research on the impact of external debt on Vietnam's economic growth shows that: (i) positive impacts of external debt on Vietnam's economic growth; (ii) the existence of Vietnam's external debt threshold; (iii) In addition, other factors such as openness of the economy, inflation, exchange rate also affect the economic growth of Vietnam Compared with previous studies of the same topic, the thesis has new contributions as follows: Firstly, empirical research using the MIDAS model allows data to be combined at different frequencies without missing important information such as other models when referring to variables at the same frequency, contributing Updated research data due to some years of external debt not updated quarterly data The results show that the positive impact of external debt on Vietnam's economic growth in the period 2000-2016, compared to previous research on this issue by Nguyen Hoang Bao and Doan Kim Thanh (2009) give negative results Secondly, the thesis assessed the impact of the external debt threshold on Vietnam's economic growth based on the existence of this debt level based on the VECM model with the dummy variables as exogenous variables The empirical results show that the debt level has a significant and significant impact on the short term growth as well as the positive impact of external debt on long-term growth Compared to previous studies on the nonlinear relationship between external debt and Vietnam's economic growth, Nguyen Huu Tuan (2012), Nguyen Ngoc Thach and Tran Thi Kim Oanh (2016), the data used in this study were frequency-based to increase the number of observations of the sample as well as to increase the reliability of the study results Thirdly, the thesis examines the impact of external debt on Vietnam's economic growth under both linear and nonlinear angles Previous studies on external debt and economic growth in Vietnam have been largely linear 1.7 Organization of the study Figure 1.1 Research frame of thesis THE IMPACTS OF EXTERNAL DEBT TO VIETNAM’S ECONOMIC GROWTH Target 1: Study the impact of external debt on Vietnam's economic growth Target 2: Determining the threshold of external debt of Vietnam Research gap + Empirical review Proposed research model Data collection and regression model estimation Analysis based on MIDAS model Analysis based on VECM model Discuss the research results Conclusions and policy recommendations CHAPTER THEORY BACKGROUND AND PREVIOUS STUDY ON THE IMPACTS OF EXTERNAL DEBTS TO ECONOMIC GROWTH 2.1 Theoretical review 2.1.1 External Debt According to the International Monetary Fund (IMF 2013), external debt at one point is the actual outstanding balance that currently requires repayment of the principal and / or interest of the borrower at a future point in time ( excluding contingent liabilities) This is the debt of the nonresident borrower A foreign country's debt is defined as the debt of a non-resident borrowing a resident of an economy, regardless of entity or natural person, but is liable for the repayment of the loan, in accordance with the provisions of the current law 2.1.2 Classification of external debt According to the IMF (2013), external debt classification is based on borrowers, loans and conditions If based on the subject of the loan, including the creditor and private creditors If the borrower is a borrower, it includes external debt in the public sector and private sector debt Finally, if the loan conditions are based on preferential loans (ODA) and non-preferential loans 2.1.3 Economic growth Todaro and Smith (2006) define economic growth as a process of increasing the nation's productivity to bring productivity and income growth.Economic growth is an increase in the output of goods and services that has been sustained over the long term (Chaudhuri 1989) In short, economic growth is defined as the production of goods and services in a country and, with it, a rise in average incomes, and the shift in economic structure 2.1.4 The theory of the impact of external debt on economic growth 2.1.4.1 Two - gap model Chenery and Strout (1966) in the two-gap model on the basis of an analysis of the impact of external capital on economic growth based on analytical framework of input factors for the economy Analytical model based on the study of Chenery and Bruno (1962) as follows: Y=C+I+X-M (2.1) Y=C+S (2.2) S=Y-C (2.3) C+I+X= C+S+M (2.4) I-S=M-X (2.5) In that, Y is the national expenditure, C is consumption, I is investment, X is export, M is import, (I-S) is the saving distance, (MX) is the trade gap Equation (2.5) shows the balance between the savings gap and the trade gap The first gap is the investment gap that will limit growth because of the important role of investment in growth models Foreign trade deficit is the second gap that limits growth the economy of developing countries External funding is the solution to the two shortcomings mentioned above (Chenery and Strout 1966) In addition, this model emphasizes equation (2.5) is not balanced, there are two situations occur The first is that the investment gap is greater than the foreign trade deficit Countries should reduce investment and increase domestic savings In contrast, countries should increase trade surpluses External funding contributes to the balance of model two Table 3.1 Describe the variables used in the research model No Variables Dependent variable GDP Signification Pretension The growth rate of gross domestic product of Vietnam EXD Independent variables External Debt/GDP ratio (% of GDP) + OPE (Import + Export)/GDP ratio (% of GDP) + M2 Broad Money/GDP ratio (% of GDP) - CPI Consumer price index (% change) - EX Real exchange rate (% change) + DUM Dummy variable + 3.2 Research Methods 3.2.1 MIDAS model Time series economic data are collected at different frequencies such as stock financial data by date, macro data by week, month, quarter and year There are many approaches to solving economic problems with input data at different frequencies such as Harvey and Pierse (1984), Perez - Quiros (2010) , Kuzin, Marcellino and Schumacher (2011) or using the Mixed Data Sampling (MIDs) of Ghysels, Santa-Clara and Valkanov (2002), Ghysels, Santa-Clara and Valkanov (2006), Andreou, Ghysels and Kourtellos (2009) The advantages of the MIDAS regression equation allow estimation of variables with different frequencies in the study model MIDAS, on the other hand, reduces the number of observations of some of the research variables but still uses the high frequency information of the remaining variables (Clements and Hendry 2011), such as GDP but external debt again year Ghosels, Santa-Clara and Valkanov (2002, 2006) reported in published studies related to the variable regression model of independent variable 3.2.2 VECM model The VECM model was developed from the VAR model by adding the error correction component (Δ) to the model As developed from the VAR model, the VECM model is considered a system of regression equations according to the OLS between the present value of this variable (t) and its past value (t-1) and variables other in the model combined with the error correction obtained from the co-linkage relationship The advantage of the VECM model is that it allows the measurement of the co-existence of multiple variables in the research model and allows for the measurement of the level of adjustment from the imbalance of the previous period 3.3 Research data Research data is periodic series data collected from various sources during the first quarter of 2000 - the fourth quarter of 2016 The selection of this stage for the study was to ensure objectivity and consistency after Vietnam had finished its debts with the Soviet Union Data sources are published by international organizations such as the International Monetary Fund (IMF), the Asian Development Bank (ADB), the World Bank (WB) and the General Statistics Office of Vietnam (GSO) In addition, other sources used in the thesis have a clear and formal source 3.4 Summary This dissertation uses the MIDAS model to examine the impact of external debt on Vietnam's economic growth The thesis also measures and evaluates the external debt threshold using the VECM model With the models and data presented in this section, the next chapter uses the model to present the results of empirical research CHAPTER DISCUSSION OF RESEARCH RESULTS 4.1 Descriptive statistics The statistical description presented in Table 4.1 shows that the GDP, CPI, EX, M2 and EXD values have almost the same mean and median values, not much difference The OPE, CPI, EX and M2 variables tilted more than OPE, CPI, EX, and EXD variables have a tilt of less than These values indicate the distribution shape of the variables studied in quantitative model Table 4.1 Statistics describing variables in the study Variables GDP OPE Mean 6.68 506.60 Median 6.76 404.07 M2 EXD 91.14 0.66 26.04 37.76 87.51 0.64 24.49 38.68 Maximum 9.26 1,216.04 153.51 8.2 73.53 43.69 Minimum 3.14 123.70 47.60 -4.49 10.39 29.22 Std deviation 1.24 318.50 38.03 2.66 10.10 4.16 Skewness -0.061 0.55 0.32 0.38 1.62 -0.66 Kurtosis 3.03 2.01 1.51 2.96 7.49 2.47 Jarque-Bera 0.045 6.22 7.50 1.65 237.76 1.44 Probability 0.977 0.00 0.49 Sum Observations EX 0.0445 0.0234 0.439 454.54 34,448 68 CPI 68 6,197 44.88 4,843.1 641.89 68 68 186 17 Source: Author’s computation using E-view 10.0 4.2 Results of linear relationship estimation After examining the seasonality and stopping for the research variables in step 1, the study conducted a MIDAS model analysis to examine the effects of external debt on economic growth The results show that external debt has a positive impact on economic growth during the study period and is statistically significant (Table 4.2) Table 4.2 Estimated results by MIDAS model Variable Coefficient P values C 3.6598 0.2669 GDP(-1) 0.303 0.0678 CPI -0.218 0.0001 CPI(-1) 0.114 0.0073 OPE 0.0102 0.0044 EX(-1) -0.0726 0.0057 Slope 0.9905 0.0000 Beta 0.9810 0.0000 Beta2 0.9760 0.0000 Độ dốc 0.03742 0.0895 Beta 0.1303 0.0587 Beta2 0.9320 0.0000 EXD M2 R2 0.9408 Adjusted R2 0.9338 Source: Author’s computation using E-view 10.0 In addition, the study also showed that the inclusion of variables and variable latencies in the model makes the CPI, EX (-1), OPE and M2 variables statistically significant Specifically, CPI has a negative impact on economic growth with a 1% significance level The EX (-1) also has a negative impact on economic growth with a 1% significance level OPE has a positive impact on economic growth with a 1% significance level In addition, the EXD and M2 variables also positively impacted economic growth at 1% and 10% In addition, the openness variables (-1), CPI (-1) were statistically significant in the study model As such, external debt has had a positive impact on Vietnam's economic growth during the study period 4.3 Results of estimating non-linear relations 4.3.1 External debt threshold Table 4.1 External debt threshold of Vietnam Source: Author’s computation The study uses the nonlinear function of the quadratic equation to simulate the external debt threshold for economic growth, which is estimated based on the distribution of GDP growth with foreign variable curves quadratic and determine the maximum score Simulating the debt Laffer curve is depicted in Figure 4.1 The peak of this curve is considered as the optimal threshold for economic development, showing that Vietnam's external debt threshold is 21.5% per quarter 4.3.2 Results of VECM model Verification of the cohesive relationship was established to demonstrate the long-term relationship between variables in the model through the Trace and Max-Eigen tests with a corresponding delay of (Table 4.3) From there select the best VECM model The results show that equation (which is constant and tends to be in the co-ordinate equation) Table 4.3 Lag length of the research model Source: Author’s computation using E-view 10.0 With equation 4, the lag length is 3, the study continues to select the number of co-loops for the model by checking Trace and MaxEigen for the selected co-expression equation The results show that there are two co-linkages under the Trace test and one co-link with the Max-Eigen test between the variables in the model at the 5% significance level, reflecting the long-term correlation relationship of the VECM model Carry out the regression estimation with VECM to determine the impact and correlation between the variables in the model corresponding to the two co-foundations found in step The results of the VECM model estimation show that the variables are marked as expected Long-run equilibrium models show results in Table 4.4 The regression coefficients of external debt are as expected and have a positive impact on economic growth The inclusion of dummy variables in the research model is statistically significant Table 4.4 Estimating VECM model in the long term t statistics Model t statistics Variale Model GDP_SA(-1) 1.0000 0.0000 OPE_SA(-1) 0.0000 1.0000 EXD_SA(-1) -1.292369 -9.26725 95.70700 14.7443 TREND 0.068312 1.62521 -18.85489 9.63728 C 27.17890 -2,457.312 Source: Author’s computation using E-view 10.0 Short-term estimation results are statistically significant as shown in Table 4.5 To clarify the relationship between the shortterm variables of the VECM model, the study conducted the Granger causality test The Granger test results show the relationship shown in Figure 4.2 Tables 4.5 Estimating VECM model in the short term Dependent variable D(GDP_SA) D(OPE_SA) Independent variable Coefficient t statistics Coefficient t statistics D(GDP_SA(-1)) -0.307291 -2.17860* 1.396054 0.32595 D(GDP_SA(-2)) -0.090696 -0.59340 11.68078 2.51681** D(GDP_SA(-3)) 0.213791 1.52368 -0.546524 -0.12827 D(OPE_SA(-1)) 0.027120 5.02892*** 0.169866 1.03731 D(OPE_SA(-2)) 0.004840 0.70717 -0.190049 -0.91439 D(OPE_SA(-3)) 0.007934 1.09793 -0.534654 -2.43667** D(EXD_SA (-1)) -0.034290 -0.70861 -1.127655 -0.76740 -0.013053 -0.27856 1.137998 0.79975 D(EXD_SA (-2)) D(EXD_SA (-3)) -0.070817 -1.65972 1.231295 0.95033 C -0.059691 -0.18438 0.274720 0.02795 DUM -0.084757 -1.93674* 3.498831 2.63290*** R2 0.650741 Dependent variable 0.498870 D(EXD_SA) Independent variable Coefficient t statistics D(GDP_SA(-1)) -0.141420 -1.05464 D(GDP_SA(-2)) -0.113970 -0.78436 D(GDP_SA(-3)) -0.005954 -0.04463 D(OPE_SA(-1)) 0.007583 1.47901 D(OPE_SA(-2)) 0.005660 0.86986 D(OPE_SA(-3)) 0.005836 0.84947 D(EXD_SA (-1)) -0.045642 -0.99221 D(EXD_SA (-2)) -0.032208 -0.72298 D(EXD_SA (-3)) -0.015914 -0.39232 C -5.628653 -18.2885* DUM 0.896497 21.5481* R2 0.959415 ***, **, * statistically significant at 1%, 5% 10% Source: Author’s computation using E-view 10.0 Granger's causal assessment shows that short-term external debt affects growth and economic openness At the same time, economic openness also affects economic growth For cumulative reaction, external debt and economic openness react to the shock of economic growth External debt reacted with new equilibrium gain from t = after shock at -0.3 Economic openness reacted with new equilibrium attained from t = after shock at 10 Openness of the economy reacted to itself and reached a new equilibrium at 21 from t = Similarly, external debt reacted with a new equilibrium gain of 0.2 from t = The debt of the water only reacts to itself and reaches a new equilibrium from t = Table 4.2 The relationship between the variables of the research model D(GDP_SA) D(EXD_SA) D(OPE_SA) Carry out tests to ensure stability and consider whether the requirements of the VECM model are satisfactory First of all, the AR test is to ensure the stability of the model The test results show that all inverse solutions are in unit circle This shows that the VECM model ensures stability and sustainability Continuing research on the following assessments aims to ensure VECM requirements for residuals Carry out the Portmanteau test and the Lagrange factor (LM) to examine the sequence correlation of the residue The results show no residual autocorrelation The standard deviation of the remainder indicates acceptance of the hypothesis H0 (there is no statistical basis for rejecting the residual hypothesis of the normalized distribution model) with a significance level of 1% (Table 4.6) Table 4.6 Testing the normal distribution of residuals Testing the normal distribution of residuals Part Jarque-Bera 0.59 2.1292 2.7194 p values 0.8987 0.5460 0.8432 Source: Author’s computation using E-view 10.0 CHAPTER CONCLUSION AND RECOMMENDATIONS 5.1 The main findings of the study The first objective of the thesis is to assess the impact of external debt on Vietnam's economic growth The results of the empirical analysis using the MIDAS model show that external debt has a positive impact on economic growth in the long run For external debt, the 1% increase in external debt / GDP will increase GDP by 0.99% At the same time, economic openness has also positively affected economic growth at an open-ended rate of 1%, increasing GDP by 0.01% The empirical analysis shows that M2 money supply has a positive impact on economic growth in the direction of changing the money supply by 1% to increase GDP by 0.037% Thus, research has solved the first objective of the thesis For the second goal of the existence of external debt threshold The empirical results of the VECM model show that the optimal level of external debt for Vietnam is 21.5% of GDP per quarter The study confirmed the existence of Vietnam's debt threshold in the study period This result is the basis for policy makers to pay attention to the mobilization of capital for the economy In addition, the external debt threshold also has a positive impact on Vietnam's economic growth in the short and long term The study addresses the second objective of the thesis on the nonlinear relationship between external debt and economic growth, and also shows the impact of the external debt threshold on economic growth in Vietnam 5.2 Policy recommendations 5.2.1 Effective use of external debt First, through quantitative research, shows the positive impact of external debt on economic growth However, effective management of this flow of capital is a matter of great concern to ensure the ability to repay However, the fact that Vietnam's external debt ratio is close to that allowed by the National Assembly (50% of GDP) is a barrier to the use of such funds for infrastructure investment in the economy Therefore, to remove this barrier, external debt management should be monitored on the basis of monitoring of debt-to-equity ratios rather than the current level of debt The basis for this issue is the fact that Vietnam's debt level is 21.5% per quarter, equivalent to 86% per year, which is relatively low compared to the current level Therefore, this issue should be for the National Financial Supervisory Commission to monitor the targets to ensure debt settlement to mobilize foreign capital for economic reform of Vietnam Second, the results of quantitative studies also show the impact of real exchange rates on economic growth and external debt Therefore, besides implementing the policy of foreign exchange management on the basis of stabilizing the exchange rate to stabilize external debt Third, Vietnam needs to use domestic financial resources to develop the country instead of borrowing outside to develop the private sector The basis of this recommendation is based on the transmission mechanism of Nautet and Meensel (2011) showing the impact of private investment on economic growth Therefore, using external debt to develop the private sector is an important foundation for securing debt repayment To this, the government has to pay attention to the development of the private economy Finally, effectively allocate foreign loans to develop the economy on the basis of improved absorptive capacity The government should eliminate the mechanism of applying for stateowned enterprises in the allocation of foreign loans On the basis of considering the ICOR in sectors to allocate investment capital, ensuring sustainable debt repayment in the future Priority should be given to allocating foreign loans to economic sectors that contribute to GDP growth as well as employment 5.2.2 Monitoring and maintaining external debt information Qualitative analysis shows that information on external debt has not been updated and the management model is overlapping among ministries Although the National Assembly has assigned the Ministry of Finance to be the main focal point for external debt, in coordination with the Ministry of Planning and Investment and the State Bank, the key role has not been shown much Therefore, the government needs to transparently and publicly disclose external debt information of Vietnam quarterly as developed countries are doing This information is an inherent weakness now needs to be changed According to the current regulations, information on public debts and external debts is announced every six months but not well implemented through news on public debt and external debt Publicity and periodic updates of this information will not only help to improve management and forecasting but also build trust from current and future donors 5.2.3 Ensuring future repayment capability First, external debt has a positive impact on Vietnam's economic growth, so it is necessary to use this channel in the future to mobilize investment capital for the economy with low interest rates To this, Vietnam needs to step up export activities on the basis of localization of domestically produced products in order to secure future sources of foreign currency This problem increases the openness of the economy, in line with the empirical results in Chapter that external debt has an impact on openness and openness that has a positive effect on economic growth To realize this, we need diversified products and export markets For products, it is necessary to focus on high added value goods on the basis of comparative advantage and price stability Second, increase foreign reserves to ensure short-term debt repayment As of June 2018, Vietnam's foreign reserves stood at US $ 63 billion, but at a minimum, according to international practice, about 12 weeks of imports Therefore, Vietnam needs to pay attention to this index rather than the absolute number of foreign exchange reserves To this end, the SBV needs to improve the balance of payments, especially the trade balance and FDI At the same time, effective management of this resource rather than deposited at foreign banks as before by strengthening the SBV's active management of foreign reserves on the basis of amending legal documents current law 5.3 Limitations and further research directions Besides the new contributions, the thesis also has some limitations One of the limitations of the study is the up-dating of quarterly external debt data Currently, the World Bank and ADB not update this data quarterly since 2014 In addition, much of Vietnam's macro data is updated yearly, with no quarterly analysis of data as direct investment foreign exchange reserves, external debts, etc As a result, these variables have not been considered in the model of economic growth as well as in the external debt of Vietnam The sample size is small (68 observations) and not long enough for long-term analysis In addition, the study does not mention the adverse effect of economic growth on external debt The next study of the topic is to include more independent variables in the study in relation to external debt that affects Vietnam's economic growth It is also possible to study the causal relationship between external debt and economic growth in Vietnam LIST OF AUTHOR’S PUBLICATION Nguyễn Xuân Trường & Lê Phan Thị Diệu Thảo 2018, Kinh nghiệm quản lý nợ nước Hàn Quốc học cho Việt Nam, Tạp chí Thị trường tài tiền tệ số 09, 36-39 Nguyễn Xuân Trường 2018, Đánh giá tác động nợ nước đến tăng trưởng kinh tế Việt Nam mơ hình VECM, Tạp chí Ngân hàng số 06, 09-16 Nguyễn Xuân Trường 2018, Tác động nợ nước đến tăng trưởng kinh tế Việt Nam mơ hình VECM, Tạp chí Cơng nghệ & Ngân hàng số 145, 20-30 Thảo L.P.T.D, Trường N.X., 2019 The Impact of External Debt to Economic Growth in Viet Nam: Linear and Nonlinear Approaches In International Econometric Conference of Vietnam (pp 952-967) Springer, Cham ... frame of thesis THE IMPACTS OF EXTERNAL DEBT TO VIETNAM’S ECONOMIC GROWTH Target 1: Study the impact of external debt on Vietnam's economic growth Target 2: Determining the threshold of external debt. .. between external debt and economic growth to determine the external debt threshold for Vietnam 1.4 Scope of the study The subject of the thesis is the impact of external debt on Vietnam's economic growth. .. Objectives of the study The overall objective of the thesis is to assess the impact of external debt on Vietnam's economic growth by quantitative research model To achieve the above objectives, the thesis