Medium and high-tech manufacturing development and the connections to macroeconomic factors: Insights from a fast-growing market

The medium- and high-tech manufacturing (MHM) sector has played a crucial role in Vietnam's economic development. The purpose of this research is to identify the primary factors that contribute to the growth of the medium- and high-tech manufacturing sector in Vietnam. By applying the autoregressive distributed lag (ARDL) method to analyze annual data from 1990 to 2020, we discovered that different macroeconomic factors affect the short- and long-term development of the MHM sector in varying ways. Specifically, digitalization and human capital have a positive influence on the growth of the MHM sector over both the short and long terms. Trade openness and foreign direct investment, however, have a significant, negative long-term impact on the growth of the MHM sector. The effect of financial development on the MHM sector in Vietnam is significant and positive in the short term. Our study discloses that both the 2008–2009 global financial crisis and the Covid-19 pandemic positively impacted Vietnam's MHM sector, as global manufacturers diversified their supply chains and moved their production facilities to Vietnam during and after these events. From the empirical findings, our study offers valuable suggestions to the Vietnamese government, which will enable the country to unlock its full potential for MHM growth.