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Dynamics of Monetary Policy, Foreign Direct Investment and Sustainable Economic Development

In: Vietnamese Business and Sustainable Development in a Globalized and Digitalized Era

Author

Listed:
  • Thi-Thanh-Binh Le

    (Ton Duc Thang University, Department of Finance, Faculty of Finance and Banking)

  • Thi-Thuy-Quynh Le

    (University of Liège, Department of Management, HEC Liège - Management School)

  • Dieu-Linh Vu

    (Vietnam, Women’s Academy, Department of Economics, Faculty of Economics and Finance)

  • Nguyen-Quynh-Nhu Ngo

    (Ho Chi Minh City Open University, Faculty of Finance and Banking)

Abstract

This paper examines the varying impacts of monetary policy and foreign direct investment (FDI) on sustainable economic development across different regions using Generalized Least Squares methodology. The analysis reveals that money supply positively impacts sustainable development in most regions by enhancing liquidity and fostering investment, except in Western Europe where excessive supply triggers inflationary pressures. Lending interest rates exhibit mixed effects: promoting development in Middle East, Eastern Europe, and East Asia through capital attraction, but hindering progress in Latin America and South Asia due to elevated borrowing costs. FDI consistently drives sustainable development across all regions by spurring economic growth and technological advancement. Interaction effects demonstrate FDI’s crucial moderating role in mitigating adverse impacts of monetary policy variables, underscoring its pivotal contribution to global sustainable economic development.

Suggested Citation

  • Thi-Thanh-Binh Le & Thi-Thuy-Quynh Le & Dieu-Linh Vu & Nguyen-Quynh-Nhu Ngo, 2026. "Dynamics of Monetary Policy, Foreign Direct Investment and Sustainable Economic Development," Springer Proceedings in Business and Economics, in: Zafar U. Ahmed & Nhat Tan Pham (ed.), Vietnamese Business and Sustainable Development in a Globalized and Digitalized Era, pages 312-332, Springer.
    • Handle: RePEc:spr:prbchp:978-3-032-24745-2_17
    DOI: 10.1007/978-3-032-24745-2_17
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