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Unveiling the nexus between foreign direct investment and economic restructuring: evidence from Vietnam's transformative journey

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  • Vu Hiep Hoang
  • Thi Van Anh Vu
  • Thi Lan Huong Le
  • Van Hoa Hoang
  • Thi Van Hoa Tran
  • Van Nam Le

Abstract

This study interrogates the complex dialectical relationship between foreign direct investment (FDI) and structural economic transformation in Vietnam's transitional context. While extant literature explores FDI-growth connections globally, the mechanisms through which FDI catalyses sectoral reallocation remain undertheorised in rapidly industrialising economies. Employing system GMM estimation on provincial panel data (201-2020), the epistemic trajectory reveals FDI's significant positive impact on economic restructuring - intensified by human capital development, trade openness, and institutional quality. The hermeneutic analysis uncovers a critical threshold effect, demonstrating FDI's transformative potential amplifies once inflows reach 18.5% of provincial GDP. Furthermore, substantial regional heterogeneity emerges, with North and South regions exhibiting stronger FDI-restructuring nexuses than the Central region, suggesting geographical and historical development pathways significantly moderate outcomes. This transdisciplinary scholarship contributes a sophisticated conceptual framework for understanding FDI's role in structural transformation across diverse institutional contexts.

Suggested Citation

  • Vu Hiep Hoang & Thi Van Anh Vu & Thi Lan Huong Le & Van Hoa Hoang & Thi Van Hoa Tran & Van Nam Le, 2025. "Unveiling the nexus between foreign direct investment and economic restructuring: evidence from Vietnam's transformative journey," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 29(11), pages 52-76.
    • Handle: RePEc:ids:ijecbr:v:29:y:2025:i:11:p:52-76
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