ESG AND DIGITAL TRANSFORMATION IN VIETNAM: IMPLICATIONS FOR SUSTAINABLE GROWTH IN THE DIGITAL ECONOMY

Abstract

The current research investigates the evolving influence of digital transformation and environmental, social, and governance (ESG) dimensions on sustainable growth in Vietnam. Employing data spanning from 1996 to 2023 and utilising the ARDL Bounds testing methodology, the analysis indicates that digital transformation exerts a significant positive effect on sustainable growth in the short term, whereas its long-term influence is negative and statistically insignificant, suggesting that initial gains are temporary and do not translate into enduring benefits. Regarding ESG components, governance demonstrates a consistently significant negative impact in both the short and long term, reflecting inefficiencies within Vietnam’s institutional framework. The social dimension exhibits a negative effect in the short term but contributes significantly and positively to sustainable growth over the long term. In contrast, the environmental factor positively influences growth in the short term but adversely affects long-term sustainability, highlighting the trade-off between immediate efficiency improvements and long-term structural and regulatory limitations. Collectively, these findings underscore the critical role of ESG considerations and digital transformation in achieving sustainable growth objectives in Vietnam. Based on this evidence, the study provides policy recommendations, including the enhancement of human capital, improvement of governance quality, and encouragement of digital innovation to foster sustained economic development.