Global Journal of Economic and Finance Research

Foreign direct investment (FDI) is a significant phenomenon in the modern globalized economy. In simple terms, it assists nations to develop through enhancement of their economies, the introduction of new technologies and employment opportunities. The world is striving towards achieving the Sustainable Development Goals (SDGs) of the UN, and it is becoming evident that FDI is playing a major role in ensuring that sustainable future becomes a reality.

This paper gives a further examination of how FDI leads to sustainable development in both the developed and developing nations, and how it impacts on the economic, social, and environmental environments of the nations.

This essay will look at how Foreign Direct Investment (FDI) has influenced sustainable development compared to the effects in the developed and developing nations. Even though FDI has been noted to be one of the major drivers of economic growth, the extent to which it will contribute to sustainability in terms of economic, environmental, and social aspects differs significantly depending on the level of economic development and the institutional framework of the host country.

In the developed countries, FDI is mostly recognized with technological, infrastructural, and social wellbeing progress, specifically with high technology industries and with energy production that is renewable. Conversely, in developing nations, FDI has been very instrumental in industrialization and provision of employment. It is however associated with undesirable side effects like environmental degradation, resource depletion, pollution and social inequalities especially in single resource intensive industries like mining and agriculture.

This paper assumes a comparative approach to discuss the various results of FDI in different geographic areas, in this case, studies of the European Union, Africa, and Southeast Asia. The discussion shows that governance systems, regulatory frameworks and institutional capabilities can play a key role in influencing the contribution of FDI to sustainable development. It is based on these understandings that the paper presents a policy recommendation that can help to make certain that FDI can help in the long-term sustainability objectives. It proposes policies to both the developed and developing countries that would help to align FDI to economic, social, and environmental sustainability.

The results underscore the need to enhance the regulatory frameworks and promote the process of corporate social responsibility (CSR) within developing nations to diminish the negative effects of FDI. Furthermore, the paper indicates the future research opportunities, in particular, the investigation of the role of CSR and longitudinal studies to get a better idea about the long-term impacts of FDI on sustainability.

Foreign Direct Investment (FDI), Sustainable Development, Green FDI, Governance

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