Assessing the influence of three policies on Vietnam's economic development: Electricity infrastructure, globalization, and privatization

Abstract

This study evaluates the contributions of three key policies—electricity infrastructure, globalization, and privatization—to Vietnam's economic development from 1980 to 2018. This period can be divided into two distinct phases: Period I (1980–1997) was characterized by high but unstable growth, while Period II (1998–2018) witnessed sustained high growth and improved stability. To assess the impact of these policies on GDP growth during both phases, impulse response and vector autoregression (VAR) analyses were conducted. Our results show that during Period I, globalization and energy infrastructure had immediate and substantial positive impacts on GDP growth but also contributed to growth rate instability. In Period II, power infrastructure and globalization continued to support GDP growth, though the effects were relatively minor. In contrast, privatization policies had a significant impact. They contributed to stable household consumption growth and enhanced the resilience of GDP growth to policy shocks, thus playing a key role in achieving the stable and high growth trajectory observed since 1998. While Vietnam's development path may appear unique from the standpoint of existing development theories, optimal growth theory offers a more suitable explanatory framework.