Towards sustainability: The relationship between foreign direct investment, economic freedom and inclusive green growth

This study contributes to the environmental and socioeconomic sustainability literature by examining three important issues. First, the study examines the effects of foreign direct investment (FDI) and economic freedom on inclusive green growth (IGG) in sub-Saharan Africa (SSA). Second, we investiga...

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Bibliographic Details
Published inJournal of cleaner production Vol. 406; p. 137020
Main Authors Ofori, Isaac K., Figari, Francesco, Ojong, Nathanael
Format Journal Article
LanguageEnglish
Published Elsevier Ltd 20.06.2023
Subjects
Economic freedom
FDI
Government integrity
Inclusive green growth
Sub-Saharan Africa
Sustainable development
P1
F21
H1
FDI
Economic freedom
Sustainable development
Sub-Saharan Africa
O55
Inclusive green growth
F6
Q01
Q56
Government integrity
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Summary:This study contributes to the environmental and socioeconomic sustainability literature by examining three important issues. First, the study examines the effects of foreign direct investment (FDI) and economic freedom on inclusive green growth (IGG) in sub-Saharan Africa (SSA). Second, we investigate whether economic freedom interacts with FDI to promote IGG. Third, we identify the minimum threshold required for economic freedom to cause FDI to foster IGG. The findings are based on macro data for 20 SSA countries. Evidence, based on instrumental variable regression, shows that, unconditionally, FDI is not statistically significant for promoting IGG. Second, the study finds that SSA's ‘Mostly unfree’ economic architecture conditions FDI to reduce IGG. Third, results from our threshold regression reveal that the minimum threshold required for economic freedom to cause FDI to foster IGG is 66.2% (Moderately free). The study sheds new light on investments necessary for SSA's economic architecture to form relevant synergies with FDI to promote IGG. •The study examines the effects of FDI and economic freedom on inclusive green growth (IGG) in sub-Saharan Africa (SSA).•The results are based on the dynamic GMM estimator and the panel threshold estimator.•Unconditionally, FDI is not statistically significant for promoting IGG in SSA.•SSA's ‘Mostly unfree’ economic architecture conditions FDI to reduce IGG.•The minimum threshold required for economic freedom to condition FDI to promote IGG is 66.2% (Moderately free).
ISSN:0959-6526
1879-1786
DOI:10.1016/j.jclepro.2023.137020