Environmental risk, FDI and tax reforms: why we must worry

Yiadom, Eric Boachie; Mensah, Lord

doi:10.1108/ajems-08-2020-0399

Cited by 13 publications

(15 citation statements)

References 36 publications

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“…Although too early in this study to establish a causal effect from FDI to carbon dioxide emissions (in this case environmental risk), Figure 1 shows that the two variables slope upwards over time; and therefore, a likely positive relationship between the two. Figure 1 is further supported by theory and empirical studies that conclude that an upshoot in the capital (FDI) resources result in an increase in economic activities and subsequently aggravates environmental risk (Boachie-Yiadom and Mensah, 2021; Singhania and Saini, 2021; Shahbaz et al , 2018; Grossman and Krueger, 1991).…”

Section: Introductionsupporting

confidence: 60%

“…The study follows Acheampong (2019) and Tamazian et al (2009) to estimate a dynamic panel model where the carbon emission ( ENVTR ) is a function of the foreign direct investment ( FDI ), financial developments components ( COMP ), squared of the components of the financial development ( COMP 2 ) and other control variables (X) consistent with the literature (Boachie-Yiadom and Mensah, 2021; Acheampong, 2019; Shahbaz et al , 2016; Tamazian et al , 2009). The control variables include the financial sector regulation index ( FR ) which is used to control for financial institutional quality, GDP per capita growth rate ( GDP ), the growth rate of the urban population ( URBAN ) and the growth rate in domestic investment ( DINV ).…”

Section: Methodsmentioning

confidence: 99%

“…In 2019 alone, the region recorded an 11% increase in FDI despite the global downturn in inward FDI (UNCTAD, 2019). The relevance of FDI in Africa’s growth struggles is evidenced in the region’s attempt to restructure its taxes, trade laws, governance, infrastructure and human capital, among others to be a key host to inward FDI (Boachie-Yiadom and Mensah, 2021; Odusola, 2016).…”

Section: Introductionmentioning

confidence: 99%

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Environmental risk and foreign direct investment: the role of financial deepening, access and efficiency

Yiadom

Mensah²,

Bokpin³

2023

SAMPJ

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Purpose This study aims to decompose financial development into its three key components (depth, access and efficiency) to investigate whether they can help to overturn the negative impact of foreign direct investment (FDI) on the environment. Design/methodology/approach The study uses a dynamic panel of 43 economies from 1982 to 2018 and decomposed financial development into its three key components: depth, access and efficiency. Findings The results from the various estimations indicate that financial deepening and efficiency reduce environmental risk and can overturn the negative impact of FDI on the environment. In addition, the study finds that low levels of financial access worsen environmental risk but doubling financial access is likely to reduce it which makes the relationship between access and environmental risk non-monotonic. After splitting the data set into high and low financially developed economies, the study reports that FDI is more environmentally depressive among low financially developed economies. Practical implications The practical implications are that improvement in financial efficiency guarantees high returns on savings and investment and can reduce environmental risk. So, central governments should invest in financial technologies and formulate financial regulations through monetary and fiscal policies to enhance financial efficiency and depth. Social implications If inward FDI to Africa continues the business-as-usual trend, the environmental risk in the region may continue to rise, environmental conditionalities for FDI must be strengthened. Originality/value The study uses a comprehensive measure of financial sector development and decomposes financial development indicators to assess their efficacy in mitigating the relationship between FDI and environmental quality.

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Section: Introductionsupporting

confidence: 60%

Section: Methodsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Environmental risk and foreign direct investment: the role of financial deepening, access and efficiency

Yiadom

Mensah²,

Bokpin³

2023

SAMPJ

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“…Therefore, next to the defined parameters, the paper applied the OECD [ 36 ] taxonomy criteria for screening all articles. For instance, to satisfy defined internal parameters, the article of Boachie Yiadom and Mensah [ 10 ] with the title: "Environmental risk, FDI and tax reforms: why we must worry" was first classified with the type "sustain" and specified as "Obvious." After that, based on the OECD [ 36 ] framework, its content was examined to arrive at its classification within the policies dimension of "Domestic Regulation."…”

Section: Methodsmentioning

confidence: 99%

“…Therefore, several fields may be addressed within one publication. For example, Boachie Yiadom and Mensah [ 10 ] contended in their article that: "A key consideration from our findings is that reforms in tax policy to lure FDI eventually harm the environment." and recommend "…Second, the existing tax rate or tax laws is not punitive enough to deter FDI from aggravating environmental risk" (2021, p. 282).…”

Section: Methodsmentioning

confidence: 99%

The status quo of research in sustainable FDI: exploring the theoretical agenda and policy inferences in West and Central Africa

Mbena

2022

Futur Bus J

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Purpose This paper investigates the status quo in the literature on sustainable foreign direct investment "FDI" in West and Central Africa. It is believed that utilizing the FDI Qualities Policy Toolkit developed by the Organisation for Economic Co-operation and Development "OECD" will help identify which policies are acknowledged today and the ones that may need particular attention from academia and policymakers. Design/methodology/approach The paper utilizes a literature triangulation of FDI, sustainability, and economic development theories to extract the seed of a narrative helping to capture the current theoretical agenda and policy implications around the phenomenon of sustainable FDI in West and Central Africa. We selected and scrutinized (N = 53) articles published in various academic journals between January 2019 and March 2022 and investigating issues around sustainable FDI. The OECD framework later assisted in mapping today's theoretical agenda and policy inferences related to sustainable FDI in the region. Findings It is acknowledged that there is an ongoing theoretical discussion informing on policy implications around the subject of sustainable FDI in West and Central Africa. It seems to be a consensus about the role of FDI's quality in enhancing sustainable regional growth. However, the use of the taxonomy has shown a clear focus on macroeconomic and ecological determinants reinforced through the OECD-defined policy dimensions of technical and financial support and international agreements and standards. The review allowed the perception of a theoretical gap in sustainability outcomes around the subjects of social justice in general and gender diversity in particular. It is recommended that academia and policymakers emphasize FDI theories and policies around the OECD framework of governance and domestic regulations. Originality/value The paper informs through a literature-based review on determinants that academia and policymakers need to give particular attention to for better addressing all subjects around sustainable FDI in West and Central Africa. The paper proactively advises on specific phenomena that should be considered to avoid the fulfillment of the hypothesis of an "African sustainable growth tragedy."

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Environmental Risk and Foreign Direct Investment: the role of Financial Sector Development

Yiadom¹,

Mensah²,

Bokpin³

2022

Environmental Challenges

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Environmental risk, FDI and tax reforms: why we must worry

Cited by 13 publications

References 36 publications

Environmental risk and foreign direct investment: the role of financial deepening, access and efficiency

Environmental risk and foreign direct investment: the role of financial deepening, access and efficiency

The status quo of research in sustainable FDI: exploring the theoretical agenda and policy inferences in West and Central Africa

Environmental Risk and Foreign Direct Investment: the role of Financial Sector Development

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