Environmental Sustainability as a Determinant of Foreign Direct Investments: Empirical Evidence from Sweden

Olga Golubeva ()
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Olga Golubeva: Stockholm Business School, Stockholm University

A chapter in The Impact of Globalization on International Finance and Accounting, 2018, pp 15-26 from Springer

Abstract: Abstract A regression model which investigates the relationship between locational choice of multinational enterprises (MNE) and environmental sustainability in host countries as the determinant of foreign direct investments (FDI) has been suggested. The following proxies are proposed for analysis of the environmental sustainability: variables measuring environmental damage, efficiency of natural resources’ employment, availability of renewable resources and, finally, governmental ability to maintain a fair distribution of resources. Swedish FDIs in 73 countries worldwide have been examined using a dataset provided by Statistics Sweden. According to the study, 83.2% of variation in the dependent variable, FDI, can be explained by the profitability of investments. The empirical evidence also indicates that environmental sustainability has little impact on foreign investors and that most investment location decisions are not made on the basis of environmental sustainability criteria, at least as it represented by proxies chosen in the paper.

Keywords: Foreign direct investments (FDI); Environmental sustainability; Pollution haven hypothesis; Pollution halo hypothesis; Return on invested capital (ROIC) (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-319-68762-9_2

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DOI: 10.1007/978-3-319-68762-9_2

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