Abstract

Foreign Direct Investment (FDI) plays a pivotal role in the development of nations. Global economic volatility, including changes in tax policies, international political conflicts, and the "nearshoring" trend, directly affects investors’ incentives. Numerous countries have been and are implementing a series of new incentive policies, ranging from tax reductions to infrastructure support, to create an attractive investment environment to attract high-quality FDI flows. The competition among nations to attract FDI is intensifying, requiring methodical, innovative strategies to capitalize on opportunities in the digital era. Investment incentives are gradually being recalibrated towards creating the most favorable conditions and opportunities for FDI capital. Cash incentives are a modality worth considering for formulating an effective FDI attraction strategy in the current context.

This article examines the shift in investment incentive forms by summarizing the international and Vietnamese contexts and analyzing the effectiveness of cash incentives compared to the current prominent financial incentive tool, tax incentives. Concurrently, the article also examines the policy frameworks and legal regulations governing cash incentives in three representative countries/regions: the United States, China, and the European Union (EU). Based on the comparative analysis, the article highlights Vietnam's current investment incentives and proposes recommendations that could be applied there.