How are FDI and green recovery related in Southeast Asian economies?

• Published in: Economic change and restructuring Vol. 56; no. 6; pp. 3735 - 3755
• Main Authors: Phung, Thanh Quang, Rasoulinezhad, Ehsan, Luong Thi Thu, Hang
• Format: Journal Article
• Language: English
• Published: New York Springer US 01-12-2023; Springer Nature B.V
• Subjects: COVID-19; Development Economics; Development policy; Economic Growth; Economic Policy; Economics; Economics and Finance; Environmental policy; Fiscal policy; Foreign investment; Green economy; International Economics; Job creation; Macroeconomics/Monetary Economics//Financial Economics; Panel data; Policy implementation; Political Economy/Economic Systems; Pollution; Sustainable development; Southeast Asia; The pollution halo hypothesis; Southeast Asia; F21; Green recovery; J21; GMM approach; FDI; Fiscal policy development; O33
• ISSN: 1573-9414; 1574-0277
• DOI: 10.1007/s10644-022-09398-0

This study is to examine how FDI and green economic growth are related in Southeast Asian economies. It also attempts to find out the role of fiscal policy development in the relationship between FDI and green growth in the economies of the region. For this purpose, a dynamic panel threshold model is used for the data over the period 2000–2018. The main results show that FDI has a positive impact on the progress of green growth in these economies, with a stronger impact in the group of Southeast Asian economies with high fiscal development. This result confirms the pollution halo hypothesis, which states that FDI can promote green growth in a country. Aligning economic priorities to improve green fiscal policies, reforming fiscal integration programs, planning for green job creation, and implementing policies to attract FDI are recommended as important policy implications over the COVID-19 period.