Globalization and Public Spending: Evidence from Global Integration in Vietnam

Abstract

The research assesses the correlation between globalization and public expenditure in Vietnam following the country's national reunification in 1975. Employing a Bayesian methodology on Vietnam's time-series dataset spanning from 1976 to 2019, the findings reveal a general negative impact of globalization on public spending. This result aligns with the efficiency hypothesis, constituting the main findings of the study. However, this relationship varies across subperiods: negative during the pre-opening period (1976-1985) and positive during the post-opening era (1986-2019). Furthermore, average real GDP correlates negatively with public expenditure, while the age dependency ratio and population exhibit positive correlations with this variable.