The Impact of Foreign Direct Investment on Vietnam’s Economic Growth: The Role of Industrial Parks

Purpose – This study aims to examine how foreign direct investment (FDI) contributes to Vietnam’s economic growth, and assesses the moderating role of industrial park development in this relationship. Design/Methodology/Approach – Using balanced panel data from 63 Vietnamese provinces between 2015 and 2021, the study applies two-way fixed effects and moderation effect models. To ensure robustness, a panel threshold model was employed, along with an instrumental variable approach to address potential endogeneity. Findings – Empirical results show that both FDI and industrial park development significantly promote economic growth. However, in regions with underdeveloped industrial parks, FDI exerts a negative impact on growth. As park development improves, the effect of FDI turns positive and becomes increasingly significant. The threshold model confirms the existence of a critical industrial park area threshold. Further analysis indicates that the moderating effect of industrial parks primarily operates through enhanced domestic investment and job creation. Research Implications – The findings highlight the pivotal role of industrial infrastructure in maximizing the developmental benefits of FDI. Policymakers should focus on enhancing the quality and connectivity of industrial parks, strengthening the technological absorptive capacity of domestic firms, and aligning FDI attraction strategies with industrial park development to magnify growth spillovers and foster balanced, sustainable regional development.