FDI Inflows and CO\(_2\) Emissions in Vietnam: The Moderating Role of Local Governance and the Scale Paradox

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DOI: https://doi.org/10.28924/2291-8639-24-2026-356
Published: Oct 26, 2026
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Thi Cam Giang Nguyen, Nguyen Minh Ha Pham, Thai Duong Mai, Bao Nhi Vu, Khanh Cuong Nguyen, FDI Inflows and CO\(_2\) Emissions in Vietnam: The Moderating Role of Local Governance and the Scale Paradox, Int. J. Anal. Appl., 24 (2026), 356.

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Thi Cam Giang Nguyen, Nguyen Minh Ha Pham, Thai Duong Mai, Bao Nhi Vu, Khanh Cuong Nguyen

Abstract

Aligned with Vietnam’s net-zero 2050 commitment, this study examines how FDI inflows affect provincial CO\(_2\) emissions, considering governance quality and economic scale. Using panel data for 63 provinces (2018-2024), CO\(_2\) emissions are proxied from electricity use per IPCC standards. The model applies FGLS with robustness checks (GMM, Driscoll-Kraay). Results show FDI reduces emissions, reflecting clean technology transfer. However, governance moderates this effect: in provinces with stronger governance, FDI-driven growth increases total emissions (scale effect). Economic scale alone is not a significant moderator. Logistics and industrial activity are key emission sources, while a higher Human Development Index is associated with better environmental quality.

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