¹Vu Duy Nguyen, ²Do Van Lam, ³Le Thi Ngoc Bich, ⁴Nguyen Thi Khanh Huyen, ⁵Le Thi Trang

^1,3,4Academy of Finance, Vietnam

²National Institute for Economics and Finance, Vietnam

⁵University of Transport Technology

DOI : https://doi.org/10.58806/ijsshmr.2025.v4i12n26

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ABSTRACT

This study investigates the impact of public investment on the quality of economic growth (QEG) in Vietnam’s Northern Key Economic Region (NKER) over the period 2010–2024. A multidimensional QEG index is constructed using Principal Component Analysis, capturing four pillars of growth performance: economic expansion, macroeconomic stability, social inclusiveness, and environmental sustainability. Using a province-level panel dataset, the empirical strategy integrates Fixed-Effects estimation with Driscoll–Kraay corrections, Random-Effects GLS, Feasible GLS, and the Arellano–Bond GMM estimator to address unobserved heterogeneity, serial correlation, heteroskedasticity, and potential endogeneity. The baseline results show that the effect of public investment on QEG becomes positive and statistically significant once small-sample biases and misspecified error structures are properly corrected. Robustness checks further demonstrate that this effect strengthens through lagged and cumulative channels, consistent with the long-gestation nature of infrastructure and institutional capital formation. Population size exhibits a persistent negative association with QEG, while human capital contributes positively and robustly across all specifications. Overall, the findings highlight the need to enhance the efficiency, targeting, and multi-year sequencing of public investment to improve the quality and sustainability of regional growth.

KEYWORDS:

Public investment; Economic Growth Quality; Northern key economic region, Vietnam, productivity.

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VOlUME 04 ISSUE 12 December 2025