Solid waste treatment, FDI and economic growth: insights from Vietnam’s provinces

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Abstract
Purpose: This study assesses whether solid waste treatment (SWT) attracts foreign direct investment (FDI) and, via that channel, raises provincial economic growth in Vietnam. Design/methodology/approach: Using panel data for 63 provinces (2006–2021), the author estimates a two-equation framework: (1) the effect of SWT on FDI inflows and (2) the joint effects of SWT and FDI on provincial economic growth. The analysis employs province fixed effects, feasible generalized least squares and system generalized method of moments (system-GMM) estimators, complemented by heterogeneity analyses across provinces. Findings: (1) SWT significantly and positively predicts FDI, (2) both SWT and FDI are positive and statistically significant predictors of provincial economic growth and (3) joint results from the two equations provide evidence consistent with FDI mediating the SWT-growth pathway. Importantly, the heterogeneity analysis reveals that the growth effects of SWT are not uniform, but are substantially stronger in provinces with higher FDI exposure and greater absorptive capacity. Practical implications: Strengthening SWT capacity and performance can serve as an effective lever for attracting higher-quality FDI and accelerating provincial income growth, particularly in provinces with adequate economic capacity and investment readiness. Social implications: Viewing SWT as a growth-enabling infrastructure can strengthen investment readiness and resilience, but basic treatment alone is insufficient for sustainability transitions, as its economic returns depend critically on local conditions. Originality/value: The study reframes SWT as a productive environmental infrastructure, offering the first province-level evidence from Vietnam on an environment-investment-growth nexus with an explicit mediating mechanism and heterogeneous provincial effects.

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