Quoc Tran-Nam

Type of the article: Research Article

Abstract
This study examines how foreign direct investment (FDI) has affected manufacturing carbon emissions in eight ASEAN economies from 2005 to 2022 using panel data from the World Bank and UNCTAD and employing random effects and feasible generalized least squares estimators. The preferred specification indicates that a 1 percentage point increase in manufacturing-adjusted FDI inflows (as a share of GDP) is associated with a 0.018-unit rise in log manufacturing CO₂ emissions (approximately 1.8%). Simultaneously, population size (coefficient ≈ 0.94) and fossil fuel energy consumption (coefficient ≈ 0.053) exert strong positive and statistically significant effects. By contrast, per capita income and its squared term are not significant, providing no support for a Kuznets type nonlinear income-emissions relationship, and lagged emissions add little once contemporaneous drivers and error structures are controlled for. The results suggest that FDI has primarily flowed into emissions-intensive manufacturing activities, with limited evidence of broad-based clean technology transfer, thereby risking a lock-in of carbon-intensive development that undermines ASEAN’s Net Zero ambitions and intergenerational equity. The paper argues that tighter environmental standards for FDI, an accelerated energy transition away from fossil fuels, and integrated population planning is needed to reconcile manufacturing-led industrial expansion with sustainability goals in ASEAN. It also offers sector specific evidence to guide FDI governance and energy policy in middle-income countries.

Type of the article: Research Article

Abstract
Static personal income tax governance in fast-growing economies can produce systematic equity erosion, as nominally fixed deductions and brackets gradually increase the effective tax burden on low- and middle-income households during periods of sustained income growth. This study develops a dynamic equity framework for evaluating personal income tax (PIT) design and applies it to Vietnam’s 2026 PIT reform as an illustrative case. Drawing on welfare economics, optimal tax theory, and contextual equity arguments, the study constructs a normative framework that treats PIT parameters as adaptive variables and evaluates reform effects using welfare-theoretic criteria. The framework identifies equity lag, defined as the divergence between a fixed PIT schedule and evolving economic conditions, as a central governance failure. The Vietnam case suggests that five years of parameter stagnation are consistent with the emergence of a systematic equity lag among low- and middle-income formal workers, a pattern illustrated through simulation analysis rather than full empirical validation. In this sense, the deduction increases may be interpreted as a Kaldor-Hicks welfare improvement concentrated in the lower and middle portions of the formal wage distribution. However, a one-time adjustment without an embedded updating mechanism is unlikely to prevent the recurrence of equity lag as growth and inflation resume. Sustaining distributional gains, therefore, requires a shift from episodic legislative correction to adaptive PIT governance through indexation rules, mandatory review schedules, and regionally calibrated deduction thresholds.