Role of Public Investment in Stimulating Aggregate Demand and Economic Growth in Vietnam: Effectiveness and Barriers to Capital Disbursement

Public investment has been a cornerstone of Vietnam’s economic strategy, particularly as the country targets a GDP growth rate of 6.5–7% in 2025. This study evaluates the effectiveness of major public investment projects in stimulating aggregate demand and economic growth in Vietnam, while also analyzing barriers to efficient capital disbursement. Using a quantitative approach, we employ an autoregressive distributed lag (ARDL) model to assess the short- and long-term impacts of public investment on economic growth, private investment, and aggregate demand. Data from the General Statistics Office of Vietnam (GSO) and other sources spanning 2000–2023 are utilized. The results confirm that public investment significantly boosts aggregate demand and economic growth in the short term but exhibits diminishing returns in the long term, consistent with an inverted-U relationship. Key barriers to capital disbursement, including bureaucratic inefficiencies, regulatory fragmentation, and coordination challenges, are identified through regression analysis and qualitative insights. Policy recommendations include streamlining administrative procedures, enhancing transparency, and prioritizing infrastructure projects to maximize economic impacts.