Search Results (371)

The aim of this study is to analyze the impact of financial inclusion on green economic growth in developing countries. For this purpose, 12 developing countries were selected based on the availability of data: Armenia, Egypt, Ethiopia, India, Indonesia, Iran, Jamaica, Kenya, Pakistan, Sri Lanka, Thailand, and Tunisia. Annual data for the period from 2004 to 2023 were used for this study. The focus of this study is on the achievement of Sustainable Development Goal 13 (SDG 13), which requires immediate intervention to address the challenges of climate change and its consequences. This study used principal component analysis (PCA) to construct the financial inclusion index. In this study, we conducted a unit root analysis using the second-generation unit root test. For long-run estimates, we used the Fully Modified Least Squares (FMOLS) model. According to the findings of the study, green innovation (β = 0.052 *), foreign direct investment (β = 0.438 *), and trade openness (β = 0.016 **) have positive and significant impacts on green economic growth (GEG). The extent of the positive effect of foreign direct investment (FDI) is greater, compared to green innovation and trade openness (TR). The results also indicate that financial inclusion (β = −0.241) and population (β = −0.291) have significantly detrimental impacts on GEG. However, the population impacts GEG to a greater extent, compared to financial inclusion. Similarly, results indicate that the negative impact of financial inclusion on GEG is greater than the positive impact of green innovation on GEG. On the basis of the findings of this study, policymakers are advised to promote green innovation, foreign direct investment, and trade openness to promote green economic growth. Moreover, this study suggests that green finance or financial inclusion constrained by environmental quality should be promoted to safeguard environmental quality. Full article

Recently, China has actively advocated green transformation in manufacturing. This paper applies the Malmquist–Luenberger (ML) index method to measure the green total factor productivity (GTFP) and its decomposition of 28 segments of China’s manufacturing industry from 2004 to 2020; then, it empirically investigates their causal relationship and impact mechanism on bidirectional foreign direct investment (FDI). The results show that inward foreign direct investment (IFDI) and outward foreign direct investment (OFDI) significantly inhibit GTFP, whereas the interactive development level between the two (DFDI) significantly promotes GTFP during the sample period. After decomposing GTFP, it is found that IFDI or OFDI has a significant promotional effect on green technical change (GTC) but an inhibitory effect on green technical efficiency change (GEC), while DFDI has a promotional effect on GTC or GEC. Further research also finds that OFDI can effectively weaken the inhibitory effects in the long run; IFDI, OFDI, and DFDI have the same direction of impact on GTFP or GEC, only showing heterogeneity at the significant level, while their impact on GTC has uncertainty in different types of manufacturing industries. The more rational the manufacturing industry structure, the more significant the promotional effect of IFDI, OFDI, and DFDI on GTFP. Full article

Energy has historically enticed significant interest from foreign investors. Simultaneously, it has perpetually held a pivotal position in any nation’s framework. Consequently, governments have long regarded energy security as a paramount concern, crucial for ensuring national stability. Energy security, simply put, is defined as “the availability of sufficient supplies at affordable prices.” However, a more contemporary perspective also emphasizes the necessity for long-term sustainability in the supply. This perspective adds a new foundational element—sustainability—to the concept of energy security. Stemming from this premise, two phenomena in the energy sector emerge that could impact international foreign direct investment (FDI) flows. Firstly, the transition from hydrocarbons to renewable sources necessitates substantial investment, wherein foreign investments could play a pivotal role. Secondly, there is an increasing trend of States utilizing FDI for strategic objectives. The acquisition of strategic energy infrastructure by foreign entities is now perceived as a risk to the energy supply security of nations. Consequently, several States have bolstered their FDI screening mechanisms to assess potential impacts on supply security, infrastructure operation, and national security in general. These two aforementioned phenomena may sometimes conflict. This article aims to analyze the intricate relationship between energy security, energy transition, and foreign investments. The author posits that an overly broad interpretation of national security and the misuse of screening mechanisms could serve as instruments for shielding the domestic economy, potentially undermining the foreign investment legal framework. Such an approach in the energy sector could have a “chilling effect,” leading to a reduction in FDI and impeding the energy transition or the attainment of other energy-related objectives. At the same time, a deep reform of the international investment regime is required, which should go through a modification of International Investment Agreements (IIAs) clauses but also through a more environmentally friendly approach by investment arbitral tribunals. It appears extremely difficult to find a balance between international investment law and environmental/climate change law. In this context, the Energy Charter Treaty (ECT), which has recently undergone a “modernization process,” is assumed to be a test bench. Full article

Green growth exhibits an immense potential to transform economies and safeguard the planet as it creates a symbiotic relationship between economic progress and environmental protection. This study examines the impact of green innovation, renewable energy consumption, and institutional quality on green growth in African countries, controlling for GDP per capita, trade openness, foreign direct investment (FDI), population, and natural resource rent. The short- and long-run relationships are investigated using pooled mean group (PMG), mean group (MG), and dynamic fixed effects (DFE) models with panel data for 49 African countries from 2000 to 2021. The findings reveal that green innovation, renewable energy consumption, institutional quality, GDP per capita, trade openness, and population growth have positive long-run effects on green growth. In contrast, FDI and natural resource depletion have adverse effects. In the short run, only institutional quality and GDP per capita positively affect green growth, while natural resource rent has a negative impact. Considering these findings, this study recommends that policymakers in Africa promote green innovation and adopt energy-efficient technologies, increase the use of renewable energy resources, and improve institutional quality to achieve green growth. Full article

Environmental regulation is a crucial tool for government intervention in the field of green technology innovation. It can boost an enterprise’s competitiveness and encourage green technology innovation, both of which have a major effect on luring foreign investment. This paper first systematically elaborates on the relationship between environmental regulation, foreign direct investment (FDI), and green total factor productivity (GTFP) and then combines panel data from Chinese cities to empirically test these relationships using various methods, such as the mediation effect model, two-stage least squares, and difference-in-differences method. The study found that environmental regulation significantly boosts FDI and GTFP. FDI helps to improve GTFP, and environmental regulation can impact GTFP indirectly through FDI. The way that FDI and environmental regulations affect GTFP demonstrates regional variation. Large cities with high economic growth gain more from environmental regulation. FDI has a stronger promotion effect on GTFP in medium- and small-sized cities than in large-sized cities, and it does not significantly impact GTFP in cities with high levels of economic development or in the eastern region. Full article

An increase in carbon emissions (CO₂) may increase inward foreign direct investment (FDI) in developing countries since they are seen as pollution havens because of lax environmental regulations (pollution haven hypothesis). Developed countries may also attract FDI since stringent environment regulations in these countries working to reduce emissions might be more attractive to foreign investors concerned with their repute from a green perspective. A rise in CO₂ emissions in developed countries therefore deters inward FDI (green haven hypothesis). The existing empirical studies investigate the empirical validity of these hypotheses by focusing on the impacts of environmental policies and regulations on FDI and have yet to produce conclusive results. We examined the effect of CO₂ emissions on FDI and provide a more accurate and novel way of investigating the empirical validity of the pollution haven hypothesis against the green haven hypothesis. Specifically, we examined the non-linear effects of CO₂ emissions on inward FDI in a sample of 124 countries over the period 1997–2022. The results indicate that CO₂ emissions have an inverted-U-shaped relationship with FDI, confirming our hypotheses that higher CO₂ emissions in countries with lax environmental standards attract FDI while environmental degradation in countries with stringent environmental standards deter FDI. Full article

Faced with the dual challenges of environmental pollution and climate change, it is of great significance to study the impact of relevant environmental regulations on the synergistic effect of pollution reduction and carbon emission reduction and their influence mechanisms. Based on a theoretical analysis using the panel data of 30 provinces in China, a spatial econometric model and an intermediary effect model are used to investigate the impact of environmental regulations on the synergistic effect of pollution reduction and carbon reduction and the transmission mechanisms potentially responsible for these effects. The empirical results show the following: (1) The three kinds of environmental regulation effectively facilitate the synergistic effect of pollution reduction and carbon reduction, taking the following order when ranked according to the intensity of their effects: command-type environmental regulation (ER1) > market-based environmental regulation (ER2) > voluntary environmental regulation (ER3). (2) Environmental regulation effectively promotes the synergistic effect of pollution and carbon reduction through the three transmission mechanisms of stimulating technological innovation (TI), industrial structure upgrading (ISU), and restricting foreign direct investment (FDI), which take the following effectiveness order: TI > FDI > ISU. Based on the results of the study, policy suggestions to facilitate pollution reduction and carbon synergies are proposed to help China’s green and low-carbon development. Full article

This study focuses on deforestation, a key aspect of the current environmental decline linked to worldwide economic development and increasing populations. It examines how renewable energy consumption (RENC), GDP per capita, urbanization (URB) and foreign direct investments (FDI) have influenced the expansion of forest areas (FAG) in Romania from 1990 to 2022, utilizing an autoregressive distributed lag (ARDL) model and the Bayer–Hanck cointegration approach. The main results of the paper are the following: GDP has a positive and statistically significant long-term influence on FAG; URB and FDI have a long-term negative impact on FAG; and RENC is not a significant determinant of FAG. In the short term, a 1% increase in URB leads to an 809.88% decrease in FAG, while a 1% increase in the first and second lag of URB leads to a 323.06%, and 216.26% increase in FAG. This suggests that as more land is developed for urban use (like building homes, businesses, and infrastructure), the immediate consequence is a significant reduction in the area available for forests. This effect indicates a strong inverse relationship between urbanization and the availability of land for forests in the short term. Our results underscore the importance of sustainable development strategies, including green urban planning and robust forest conservation, to offset the adverse effects of increased FDI on Romania’s environmental conservation, emphasizing the need for careful strategic planning and strong environmental policies to balance economic growth with forest protection. Full article

As one of the important driving forces of sustainable development in coastal areas, foreign direct investment (FDI) has provided new ideas for exploring optimal strategies. This analysis explores the linear impact of FDI on sustainable development in coastal areas with 53 cities in China from 2012 to 2020. Accordingly, a dynamic panel smoothed transition regression (PSTR) model is used to analyze the non-linear impact of FDI on sustainable development, with transition mechanisms of industrial structure and technological innovation level. The findings reveal that the non-linear effect of FDI on the sustainable development of coastal areas is obvious. When the coastal area’s industrial structure is more optimized, and the level of technological innovation is higher, the promotion effect of FDI on sustainable development is more obvious. Further, the threshold effect of industrial structure and technological innovation is different. The threshold conversion rate of industrial structure is faster, but the threshold effect of technological innovation is stronger. Regionally, the impact of FDI on the sustainable development of coastal adjacent areas is significant, but not on the sustainable development of inland areas due to the few FDI inflows. This analysis offers guidance for policymakers to further develop the tertiary industry, increase financial investment in innovation in coastal areas and encourage enterprises to improve their independent innovation capacity. Full article

Economic theory argues that foreign direct investment (FDI) and external debt are expected to enhance economic growth in any given economy. Consequently, this study (i) investigated the relationship between foreign direct investment, external debt servicing, and economic growth in Nigeria; (ii) investigated how foreign direct investment and external debt impact Nigeria’s economic growth; and (iii) analyzed the direction of causality among the three macroeconomic variables. Descriptive statistics, time series autoregressive distributive lag, and robust Granger causality tests were adopted as the estimating techniques. The results showed that from 2011 to 2022, Nigeria’s FDI continued to decline, Nigeria’s external debt servicing continued to grow on an upward trajectory, and the growth of the GDP has been meandering. ARDL analysis results confirmed that the lag of FDI and current exchange rate exert positive effects on current economic growth in Nigeria, with a 1% increase in FDI, current external debt, and current exchange rate increasing growth by 1.49%, 1.58%, and 0.02%, respectively. Results from the Granger causality showed that FDI and external debt do Granger cause GDP in Nigeria. Policymakers should focus on prudent debt management practices and strive to reduce domestic debt levels. Full article

This research investigates the intricate relationship between financial openness, natural resources, and carbon neutrality in the N-11 countries. It provides insights into how environmental tax and innovation can drive carbon neutrality in these nations, thus advancing our understanding of the nexus among financial openness, natural resources, and carbon neutrality. The study aims to offer policymakers perspectives on formulating policies to foster sustainable economic development and environmental conservation in the N-11 nations. The discourse highlights the environmental implications of foreign direct investment (FDI) and trade openness, revealing a complex interplay between economic development, technological innovation, and environmental sustainability. While FDI can facilitate technological transfers and managerial advancements that enhance resource efficiency and promote environmentally friendly practices, its environmental impact varies based on regulatory frameworks and enforcement mechanisms. In countries with weak environmental regulations, FDI may lead to negative outcomes such as pollution hotspots, resource depletion, and ecosystem degradation. Similarly, trade openness can exacerbate environmental degradation through increased production, energy consumption, and waste generation. However, both FDI and trade openness can contribute positively to environmental sustainability when coupled with effective environmental policies, investment in green technology, and the promotion of sustainable practices. Thus, policymakers must strike a balance between economic development and environmental protection by implementing stringent environmental regulations, promoting clean technology transfer, and fostering sustainable development practices domestically and internationally. This research offers valuable insights for policymakers aiming to navigate the complexities of achieving carbon neutrality while ensuring sustainable economic growth in the N-11 countries. Full article

China has made significant progress in the field of clean energy and sustainable development, with its photovoltaic industry technology leading globally. What has been the trajectory of China’s successful technological catch-up over the past two decades? Is China’s experience sustainable? To clarify the interaction logic between export trade (ET), foreign direct investment (FDI), and technological independent innovation (TII) in China, this paper uses panel data from 31 provinces and cities in the Chinese Mainland between 2000 and 2022. A panel vector autoregression (PVAR) model is constructed from a dynamic endogenous perspective to verify the interaction and regional heterogeneity among the three. The results are as follows: (1) The unified analytical framework shows a significant bidirectional “positive feedback effect” between ET and TII. However, FDI inhibits TII to a certain extent. Furthermore, the correlation between ET and FDI is weak. (2) The impact of ET on TII is most pronounced in the western region, while the central region sees the highest contribution rate of FDI to TII. The self-evolution effect of TII is most evident in the eastern region. This study provides suggestions for the government to develop an adaptation policy for local industrial technology conditions and establish a National Sustainable Systems of Innovation (NSSI) with multiple comparative advantages, and serves as a reference for establishing a “Chinese model”. Full article

Recently, as more countries and regions have embarked on the path of energy transition, the speed and manner of economic development have been influenced in varying degrees. However, the relationship between energy transition and economic development remains unclear, as research conclusions are inconsistent. The aim of this study is to systematically examine the relationship between energy transition and economic development using the literature review approach. This study selected 102 studies from Scopus that explicitly address energy transition and economic development as our final sample for this investigation, aiming to clarify the current research status on factors, barriers, and pathways of energy transition, and discuss related theories about energy transition. The results indicate a significant increase in research volume on this topic over the past four years, with nearly half of the studies focusing on cross-regional countries or economic entities. The sampled literature reveals various relationships between economic development and energy transition, including one-way promotion, one-way inhibition, bidirectional causality, and ineffectiveness. Factors influencing energy transition include technology, financial support, environmental governance, human capital, taxation, rents, and foreign direct investment (FDI). The main obstacles to energy transition lie in the scarcity of environmental resources, path dependence, and uneven development. Based on these research findings, this study discusses prospects and potential directions for future studies. Full article

Several researchers have studied the environmental policy stringency and ecological innovation regarding CO₂ emissions and renewable energy consumption; however, the impact of environmental policy stringency, technological innovation, FDI, and ecological innovation on energy transition has not been studied in the case of NICs. For this purpose, panel quantile regression models are applied in the context of NICs from 2000 to 2021. Our empirical results show that the effect of foreign direct investment is positive and statistically significant on energy transition. On the other hand the variables environmental policy stringency, eco-innovation, and ICT-trade have an inverse effect on energy transition. Therefore, the findings of the study also provide policy implications that indicate NICs need to optimize their trade structure and re-innovate the latest innovation spillovers, and strict environmental policies should be introduced to facilitate energy transition in NICs. Full article

Foreign direct investment (FDI) is a key driver of economic development of both developed and developing countries. Understanding and having insights into the factors that motivate increased FDI arevery important for both academics and policy makers. A key factor that multinationals incorporate in their decisions on FDI is geopolitical risk (GPR). Therefore, this study is devotedto investigating the short-term and long-term effects of GPR on FDI in Vietnam. Data used in this study are the yearly geopolitical risk index, FDI, and other control variables covering the period from 1986 to 2021. Using the autoregressive distributed lag (ARDL) bounds testing approach, the empirical results confirm that geopolitical risk (GPR) has a significantly negative effect on FDI in Vietnam in the longterm. Specifically, in the longterm, 1 percent increase in the GPR index is associated with 5.7983 percent decrease in Vietnam’s FDI. In addition, the results derived from the ARDL model indicate that in the shortterm, GPR has a significantly positive effect on the FDI for the one-year lag, meaning that an increase in the GPR index leads to an increase in FDI. Moreover, the results derived from the error correction model (ECM) indicate that 42.89% of the disequilibria from the previous year are converged and corrected back to the long-run equilibrium in the current year. Based on the findings, some policy implications are drawn for policymakers to mitigate the negative effects of GPR on FDI. Full article