GOVERNMENT POLICY, INNOVATION, AND ENTREPRENEURIAL DYNAMISM: SHAPING VIETNAM'S FUTURE ECONOMIC GROWTH

This study examines the dynamic relationships among innovation, entrepreneurship, and economic growth in Vietnam from 2012 to 2023. It employs several advanced econometric techniques including unit root tests, the Autoregressive Distributed Lag (ARDL) model, Vector Error Correction Models (VECM), and Granger causality tests. The findings reveal a complex interplay between these variables in both the short and long run. Innovation, measured by resident patent applications, indicates a strong and statistically significant long-run impact on GDP growth. Besides, entrepreneurship contributes positively to short-run economic activity but shows a marginally negative long-run effect. It suggests that necessity-driven ventures may limit sustained productivity gains. Government policy, captured through a composite index via principal component analysis, displays no significant long-run effect but demonstrates short-run effectiveness in enabling growth, particularly through its mediating role. For instance, ICT exports and internet penetration follow a similar progression. They initially exhibit negative or insignificant short-run effects but show positive long-term contributions through mechanisms such as learning-by-exporting and digital spillovers. The study highlights the need for coordinated, long-term policy strategies that enhance human capital, foster high-quality entrepreneurship, and support digital and innovation ecosystems. It recommends targeted investments in science, technology, engineering, and mathematics education, support for innovation-based small and medium-sized enterprises. Proactive policy design is encouraged to enhance integration of domestic firms into global value chains.