Thesis Public Defense | VNP25 Khương Lan Uyên

Determinants of foreign direct investment in environmental relevant sectors: The case of OECD countries

Student: Khương Lan Uyên, VNP 25

Supervisor: Prof. Dr. Peter A.G. van Bergeijk & Dr. Nguyễn Hoàng Bảo

Abstract:

Almost all nations are trying to promote economic growth as well as narrowing inequality gap. However, they are required to concern about climate change goal which are commonly agreed by international community under Paris Agreement. There are numerous researches about total FDI or FDI in general, however, green or low carbon FDI seem to be ignored. Studying about green or low-carbon FDI is an attempt to combine economic growth and climate change goal. According to World investment report (UNCTAD, 2020), investment in sustainable development has grown quickly in “number, variety and size” and mainly flows in developed countries. Different studies have been  conducted on determining determinants to attract FDI inflows as a whole or test impacts of FDI on environment and while the analysis
of green FDI is rarely discussed. A panel sample, which covers 31 OECD countries in the period of 2005 – 2018 is used for estimation. The research aims to study the effectiveness of GDP, environmental taxes, feed-in tariffs and government spending on R&D for energy
efficiency on inward green FDI stock through basic panel analysis. This paper applies basic descriptive statistics and panel data regression models, such as Pooled OLS, Fixed Effect, Random effect and then uses BP test and Hausman test to choose the best estimation models. Results show that economic activities and environmental policies play crucial role in defining green FDI in OECD nations. All of these are proved to be correlated with higher attraction of FDI.