Green Finance and Economic Development: Exploring the Fdi Connection
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Abstract
Green Finance, as a method to implement sustainable economic practices, has become quite popular in the past few decades. It is, however, very important to see if this alternate way of financing does actually contribute to the economic success of nations. This paper tries to investigate the relationship between green finance and the flow of foreign direct investment (FDI), and thus, economic development. Data from the top 56 countries with the highest green finance expenditures has been analysed. Findings reveal that green finance does significantly influence the inflow of FDI. This research, therefore, heavily contributes to the ongoing debates on sustainable economic development. Being a relatively new concept, institutions are required to develop strategies to enable green finance to gain momentum in the mainstream commercial sectors. Governments need to explore the reasons behind these results and shape green financial policies in a way that may effectively be able to attract foreign investments.