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

Thi-Thanh-Binh Le (), Thi-Thuy-Quynh Le (), Dieu-Linh Vu () and Nguyen-Quynh-Nhu Ngo ()
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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

A chapter in Vietnamese Business and Sustainable Development in a Globalized and Digitalized Era, 2026, pp 312-332 from Springer

Abstract: 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.

Keywords: monetary policy; foreign direct investment; sustainable economic development; money supply; lending rates; green growth; economic growth; financial stability; regional analysis; GLS methodology; capital flows; technological advancement; inflationary pressures; borrowing costs; interaction effects (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-032-24745-2_17

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DOI: 10.1007/978-3-032-24745-2_17

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