THE IMPACT OF DIGITAL AND GREEN TRANSFORMATION ON SUSTAINABLE ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM VIETNAM

The dual transition toward digitalisation and green development has become a strategic priority for emerging economies seeking sustainable growth. However, empirical evidence on the simultaneous financial transmission mechanisms of these two transformations remains limited. This study explores the short- and long-term implications of the impact of digital transformation and green transformation on Vietnam's sustainable economic development in the period 1995–2023, with a particular focus on the financial factors supporting the twin-transition agenda. Using annual macro-financial time-series data and the Autoregressive Distributed Lag (ARDL) model, complemented by the Bayer–Hanck cointegration test, the analysis integrates key indicators of digitalization (EGDI and Internet usage), green transformation (renewable energy share and the SDG Index), and financial variables including public investment, domestic credit to the private sector, and green foreign direct investment, with trade openness capturing global integration. The results confirm the existence of a stable long-run cointegrating relationship, indicating that digitalization and green transformation exert positive and statistically significant effects on sustainable economic growth. Financial factors play a catalytic role: private sector credit averaged over 90% of GDP since 2015 and reached 128.68% in 2023, facilitating the diffusion of digital technologies and supporting renewable energy projects, while public investment (approximately 7% of GDP) accelerates the upgrading of green and digital infrastructure. In contrast, green FDI inflows remain modest, highlighting untapped potential for ESG-oriented capital. The findings underscore the need for coordinated financial and fiscal frameworks to expand green financial instruments, enhance the efficiency of green and digital public investment, attract high-quality green FDI, and align financial markets with sustainability objectives. This study contributes novel finance-based empirical evidence for Vietnam and provides insights relevant to other emerging economies pursuing finance-driven digital and green transformation for sustainable development.