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

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.