Journal Article

Linking FDI and Sustainable Environment in EU Countries

Dornean, Adina, Chiriac, Irina, Rusu, Valentina Diana

2022

Overview

The aim of this study is to emphasize the link between the foreign direct investments (FDIs) and the sustainable environment in EU countries. We also focus on investigating the influence of other factors related to business environment on FDIs, considering the investors’ sustainable choice for the host countries, grouped according to FTSE Russell criteria. Using panel methodology and applying Ordinary Least Squares (OLS) method of data analysis, the authors reached the conclusion that a better-rated business environment, with concern for sustainability, has more of a chance to attract larger sums of FDIs, mostly in the case of developed economies. This fact proves that the main advantage considered by a foreign investor in developed EU countries is represented by CO2 emissions (sustainable environment) and a good ease of doing business environment. The study highlights the factors that influence the decision of investing in developed countries, rather than in emerging and frontier ones. This paper contributes to the existing literature by identifying the group of countries which need a more sustainable approach to attract a large amount of FDIs, given that the inflow of FDIs is a crucial factor of economic growth, a possible source of innovation and technology, and a way to reduce poverty.

• Publisher: MDPI AG
• Subject: Carbon / Economic aspects / Economic development / Economic growth / Economic research / Environmental aspects / Environmental sustainability / Foreign exchange rates / Foreign investments / GDP / Globalization / Gross Domestic Product / Industrialized nations / Institutionalism / International trade / Per capita / Tax increases / Taxes / Variables