Comparative Analysis of Remittances’s Impact on Vietnam’s Economy

In recent years, labor export from Vietnam has evolved from its traditional role to alleviate poverty and generate employment for the population. Instead, it is increasingly viewed as a source of rising remittances. According to the latest data, Vietnam dispatches approximately 100,000 workers abroad annually, resulting in remittances exceeding 3 billion USD annually. This substantial influx significantly contributes to the country’s GDP. To gain a more precise and comprehensive understanding of how remittances have impacted Vietnam’s economic development over the past two decades and beyond, this research employs an ARDL bounds testing approach for cointegration and an error correction model derived from ARDL to assess the impacts of remittances on the Vietnam’s economy. The framework, proposed by Pesaran et al. (J Appl Econ 16:289–326, 2001), allows for the analysis of both the long-term trends and short-term dynamics among the variables. These findings can add to the existing literature on the relationship between remittances and economic growth. With dataset collected from 2000 to 2022, this study provides up-to-date empirical evidence on whether remittances and financial development complement or substitute each other in driving GDP growth.