The Role of International Capital Flows in Promoting the Circular Economy Model in Vietnam
DOI:
https://doi.org/10.65150/EP-jefrr/V1E6/2025-02Keywords:
Circular economy, international capital flows, foreign direct investment (FDI), green finance, sustainable development, public policy.Abstract
This study aims to provide an in-depth analysis of the multifaceted role of international capital flows in initiating, promoting, and scaling up the circular economy (CE) model in Vietnam. Using a qualitative research method, the paper conducted 23 semi-structured in-depth interviews with five key stakeholder groups, including policymakers, international organizations, FDI enterprises, domestic enterprises, and experts. The findings reveal that international capital is not only a key financial driver for large-scale CE projects but also serves as a channel for transferring advanced technology ("hardware") and managerial knowledge, including ESG standards ("software"). Notably, these capital flows create positive pressure, compelling Vietnamese enterprises to comply with green standards through demands from supply chains and investors. However, this potential is hindered by significant barriers, including an unclear legal framework, an underdeveloped market for recycled products, and weak domestic enterprise capacity. Therefore, the study emphasizes that to optimize the role of international capital, Vietnam must urgently refine the legal framework, particularly by issuing a national Green Taxonomy, while concurrently implementing market-creation policies and enhancing the capacity of domestic enterprises. These findings offer important implications for policymakers and businesses in building a sustainable CE ecosystem.
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