Factors Influencing the Decision to Increase Foreign Direct Investment: A Study in Rural Areas of Thai Nguyen Province

Abstract

Thai Nguyen is a province situated in the midland and mountainous region, with approximately 60% of its population residing in rural areas. The province possesses numerous attributes that are attractive to foreign investors. Foreign direct investment (FDI) projects play a crucial role in the socio-economic development of the province in general and in generating employment opportunities and increasing income for rural labor in particular. This study aims to analyze the determinants influencing the decision to increase FDI capital by employing quantitative methods, exploratory factor analysis (EFA), and multivariate regression analysis. Data for the study were obtained from a survey of 206 FDI enterprises and analyzed using the SPSS software (Version 26.0). The findings reveal seven factors that positively influence investors' decisions to expand FDI capital, ranked from the most to the least significant: infrastructure and support services, market purchasing power, investment incentive policies of the host country; economic, political, and social stability; investor capacity, investor motivation, and human resources. The research model accounts for 64.3% of the variation in decisions to increase FDI capital. Based on these findings, several recommendations are proposed to further enhance FDI inflows into Thai Nguyen Province.

Keywords: capital; foreign direct investment; exploratory factor analysis; rural areas

DOI：10.62321/issn.1000-1298.2024.10.03