Sustainability-Oriented Drivers of Foreign Direct Investment Intent at the Local Level: Evidence from Quang Ngai Province, Vietnam

Foreign direct investment (FDI) is widely recognized as a vital catalyst for economic transformation and sustainable development, particularly in developing economies striving to achieve inclusive and resilient growth [1-3]. Beyond its role in capital accumulation and technology transfer, FDI serves as a mechanism for industrial upgrading, employment generation, and cross-border innovation, thereby supporting the implementation of several United Nations Sustainable Development Goals (SDGs), including SDG 8 on Decent Work and Economic Growth, SDG 9 on Industry, Innovation and Infrastructure, and SDG 11 on Sustainable Cities and Communities. By integrating international capital with local resources, FDI contributes not only to economic efficiency but also to the structural transformation and sustainability of local economies.

For Vietnam, FDI has been a cornerstone of its transition from a centrally planned to a market-oriented economy, enhancing the nation’s competitiveness through global value chain integration and technological advancement [4, 5]. Over the past three decades, foreign investment has helped the country accelerate modernization and industrialization, generating substantial socio-economic benefits. In 2023 alone, Vietnam attracted USD 36.6 billion in FDI inflows—a 32.1 percent increase compared to the previous year—contributing approximately 8.51 percent of the national GDP [6]. The FDI sector has become an important driver of exports, budget revenues, and employment, thereby strengthening national resilience in the face of global economic fluctuations [7].

At the local level, the case of Quang Ngai Province (Figure 1) in Central Vietnam demonstrates how FDI can foster sustainable regional development. The province, home to the Dung Quat Economic Zone and Vietnam’s first oil refinery [8], has attracted 69 active FDI projects with total registered capital exceeding USD 2.1 billion [6]. These investments have stimulated industrial restructuring, improved infrastructure, and enhanced human capital formation, contributing to a more diversified and competitive economy. Yet, sustaining these gains requires careful attention to environmental stewardship, social inclusion, and transparent governance. In line with Vietnam’s National Green Growth Strategy (2021–2030), provincial governments are increasingly focusing on aligning investment attraction policies (CSTH) with sustainable development principles. This approach underscores that FDI should not only drive economic expansion but also support community well-being, ecological balance, and long-term institutional integrity—the three interdependent pillars of sustainability. Recent Vietnam-based studies further show that subnational FDI strategy and sustainable local governance require policy coordination, administrative transparency, and context-sensitive planning [9, 10].

Globally, the dynamics of FDI are being reshaped by rapid technological change, digital transformation, and evolving geopolitical tensions [11]. The Fourth Industrial Revolution (4IR) has accelerated the convergence of innovation, sustainability, and competitiveness, requiring host economies to adapt to new investment patterns that prioritize digitalization and low-carbon development [12]. At the same time, geopolitical events such as the U.S.–China trade war and the Russia–Ukraine conflict have prompted multinational corporations to diversify production bases and reconfigure global supply chains [13, 14]. For Vietnam, and particularly for provinces like Quang Ngai, these developments present both opportunities and challenges. Strategic advantages such as geographical location (VLDT), stable political conditions, and competitive labor costs make Quang Ngai a potential hub for sustainable investment. However, the province still faces limitations in digital infrastructure, energy efficiency, and high-tech industrial capacity. As the People’s Committee of Quang Ngai Province [15] emphasizes, attracting high-quality, environmentally friendly investment requires continued improvements in industrial policy, logistics systems, and environmental management frameworks. This interpretation is also consistent with recent evidence on Vietnam’s strategic adaptation to technological, geopolitical, and environmental challenges [16].

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Understanding the determinants of FDI intent within this new context (BCM) is therefore essential for designing sustainable investment policies. By identifying the socio-economic, institutional, and contextual factors that shape investors’ decisions, local authorities can strengthen regional resilience and ensure that economic growth aligns with sustainability objectives. FDI attraction should not be viewed merely as a competition for capital inflows but as a strategic process to advance long-term development, environmental responsibility, and social welfare.

This study investigates the key determinants influencing FDI intent in Quang Ngai Province, focusing on how contextual dynamics, CSTH, infrastructure, local human resources (NNL), and public services (DVC) shape sustainable investment behavior. Employing a mixed-methods approach, the research integrates qualitative insights with quantitative analysis to provide a comprehensive understanding of FDI’s sustainable drivers at the local level. The study contributes to the literature by conceptualizing FDI intent as a mechanism for sustainable regional transformation rather than a purely economic phenomenon. It also provides empirical evidence to support the alignment of local investment strategies with Vietnam’s broader sustainable development agenda and the SDGs. Ultimately, the findings aim to assist policymakers in building adaptive, inclusive, and environmentally conscious investment frameworks that promote regional sustainability while enhancing competitiveness in a rapidly evolving global economy.

To avoid overstating the empirical scope of the study, sustainability is treated here as a policy orientation and interpretive framework rather than as a directly observed outcome variable. The dependent variable is investment intent (YDDT); therefore, the analysis evaluates which local factors are associated with investors’ willingness to invest in a sustainability-oriented provincial development context. Environmental and social outcomes of FDI projects are beyond the direct measurement scope of the current dataset and are identified as priorities for future research.

This study employed a mixed-methods design to investigate the determinants influencing FDI intent in Quang Ngai Province, Vietnam. The methodological approach integrated both qualitative and quantitative components to ensure a comprehensive understanding of the research problem and to validate findings through data triangulation.

The qualitative phase consisted of semi-structured interviews with 30 participants, including five senior officials from the Quang Ngai Department of Planning and Investment and 25 executives from foreign-invested enterprises. These interviews helped refine the conceptual framework and identify context-specific factors affecting investment decisions. A structured interview guide was used to ensure consistency, focusing on six thematic areas: infrastructure, policy environment, labor quality, DVC, geographic advantages, and global economic context.

For the quantitative phase, a structured questionnaire was designed based on insights from the qualitative interviews and prior literature. The survey employed a five-point Likert scale to measure perceptions of factors influencing YDDT. A stratified random sampling technique was used to select 400 representatives from FDI enterprises operating in the province. After excluding incomplete responses, a valid sample of 381 participants was obtained, covering diverse industries and company sizes.

The sampling frame consisted of enterprise representatives with direct knowledge of investment decisions or operational conditions in Quang Ngai. Responses were screened for completeness, consistency, and eligibility. Questionnaires with substantial missing responses, duplicated entries, or respondents outside the intended enterprise-representative profile were excluded. For retained questionnaires, item-level missing values were checked before scale construction; no imputation was used for incomplete questionnaires excluded during response filtering.

Data were analyzed using SPSS 26. Reliability of measurement scales was assessed using Cronbach’s Alpha, and exploratory factor analysis (EFA) was applied to identify latent constructs. Multiple linear regression was employed to determine the strength and significance of relationships between independent variables and YDDT. The model was validated using the Durbin-Watson statistic and multicollinearity diagnostics (variance inflation factor (VIF)).

Because all quantitative measures were collected from a single survey instrument at one point in time, common method bias was assessed using Harman’s single-factor diagnostic. The first unrotated factor explained 25.441% of the variance, which is below the commonly used 50% threshold, suggesting that a single general factor did not dominate the data. Additional robustness was evaluated through reliability refinement, factor-retention checks, Pearson correlation diagnostics, multicollinearity statistics, and model-fit diagnostics. As an additional sensitivity check, the final regression specification was interpreted after excluding the unreliable geographical-location construct and low-performing items identified during reliability refinement; the direction and statistical significance of the five retained predictors remained consistent with the bivariate correlation results, supporting the stability of the final model specification. These procedures do not eliminate all risks associated with cross-sectional self-reported data, but they reduce the likelihood that the main regression results are driven only by measurement artefacts.

All procedures adhered to ethical standards. Participants gave informed consent, and confidentiality was ensured. The research was approved by the Quang Ngai Department of Planning and Investment. The described methodology offers a transparent and replicable framework for analyzing FDI determinants in similar regional contexts.

The quantitative research findings demonstrate that five key factors are positively associated with enterprises’ YDDT in Quang Ngai Province, aligning with the proposed research hypotheses. These factors include CSHT, CSTH, NNL, BCM, and DVC. The significance of these factors is evaluated through their respective standardized β coefficients, where larger values indicate stronger associations with YDDT. These findings are consistent with qualitative research results and preliminary analyses, providing a comprehensive understanding of the determinants of investment decisions.

CSTH emerge as the most influential standardized predictor of YDDT, with a corrected β coefficient of 0.377. This finding emphasizes the pivotal role of government policies in attracting FDI, consistent with qualitative evidence that underscores the importance of streamlined administrative processes, transparent legal frameworks, and financial incentives. Such policies are vital for fostering investor confidence and improving the perceived credibility of the provincial investment environment. The result indicates that provincial governments and central authorities should actively implement coherent, transparent, and predictable policy instruments to expand FDI. This policy implication is reinforced by Vietnam-based evidence that lean, decentralized, and digitally enabled governance can improve sustainable local development planning [10].

CSHT ranks second in standardized importance, with a β coefficient of 0.287. The study underscores the importance of well-developed infrastructure in attracting FDI, as it supports operational efficiency, economic development, and job creation. These findings are consistent with qualitative evidence suggesting that targeted investments in infrastructure—such as roads, power networks, and water systems—are essential for creating a conducive environment for investment in industrial zones and coastal tourism areas.

The influence of NNL is reflected by a β coefficient of 0.264, making it the third most important predictor. The results indicate that a skilled and disciplined workforce, together with adequate labor availability, positively influences YDDT. These findings align with qualitative insights that highlight the value enterprises place on the availability of a competent workforce, which contributes to improved productivity and long-term economic sustainability.

DVC rank fourth in standardized importance, with a β coefficient of 0.158. This result indicates that simplified administrative procedures, supportive provincial authorities, and effective investment-promotion services remain important for shaping investor perceptions, even though their standardized association is smaller than those of policy, CSHT, and NNL.

BCM remains statistically significant, with a corrected β coefficient of 0.099, but it should be interpreted as a supporting contextual condition rather than the strongest predictor. This construct captures broader macro-contextual and provincial conditions, including demographic resources, private-sector development, income growth, policy recognition of FDI, and perceived resilience to climate-related disruption. The result suggests that these contextual elements help shape YDDT, but they are less decisive than the direct policy environment, infrastructure, workforce capacity, and public-service quality.

Importantly, the study indicates that FDI attraction is no longer determined solely by traditional cost and location factors but is increasingly shaped by policy credibility, infrastructure readiness, workforce capacity, public-service quality, digitalization, climate-related risks, and shifts in global supply chains. At the same time, the findings should be read within the study’s empirical scope: the dependent variable is YDDT, and the research does not directly evaluate post-investment environmental, social, or economic sustainability performance.

This research is funded by University of Finance – Marketing, Vietnam. The authors thank the participating enterprise representatives and officials for their time and insights.