,
International School, Vietnam National University, Hanoi, Vietnam; University of Economics and Business, Vietnam National University, Hanoi, Vietnam Vietnam
National Economics University, Hanoi, Vietnam
In foreign direct investment (FDI) promotion, there is a traditional focus on investment volume measured by the number of projects, inflow of investment, and ease of approvals. But the rising demands for sustainability in the global environment have made investment quality, ESG compliance, and value creation the focus of FDI. This paper attempts to provide a solution to the problem of transitioning FDI promotion policies from volume-driven attractiveness to an ESG-driven investment strategy for sustainable economic development. In this study, the theoretical framework has been developed between FDI promotion policy tools and ESG compliance quality and value-based FDI outcomes. The empirical
research was conducted in the Vietnamese context with the application of a quantitative methodology to develop and test the framework. A quantitative cross-sectional survey was conducted on 420 valid responses obtained from FDI firm managers, ESG officers, industrial zones, investment promotion officials, and policy experts. The research findings reveal that volume-based FDI promotion reduces ESG compliance quality (β = -0.193, p < 0.001) while ESG-based incentives (β = 0.205, p < 0.001), screening visibility (β = 0.192, p < 0.001), ESG-based aftercare (β = 0.192, p < 0.001), policy coordination (β = 0.181, p < 0.001), and regulatory capacity (β = 0.152, p < 0.001) increase ESG compliance quality. Additionally, ESG compliance quality is found to positively affect the value of FDI performance (β = 0.389, p < 0.001). It can be concluded that countries' investment competitiveness can be improved through including measurable ESG criteria in their promotion, incentive, and regulatory policies.
This is an open access article distributed under the Creative Commons Attribution Non-Commercial License (CC BY-NC) License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
The statements, opinions and data contained in the journal are solely those of the individual authors and contributors and not of the publisher and the editor(s). We stay neutral with regard to jurisdictional claims in published maps and institutional affiliations.
