Is foreign direct investment caring for sustainability? A look in African sub-Saharan countries
Sustainability Accounting, Management and Policy Journal
ISSN: 2040-8021
Article publication date: 31 October 2022
Issue publication date: 4 September 2023
Abstract
Purpose
Business politics and social and economic policies in the past decades brought us to the inevitability of change. Foreign direct investment (FDI) plays a vital role in this change as it is a tool for international business management in a global world. The relationship between FDI and sustainability in sub-Saharan countries with lower incomes has not yet been sufficiently studied, so this study aims to bring some more conclusions to the discussion. Thus, the main objective is to understand if FDI effectively influences the so-called triple bottom line (TBL) pillars of sustainability.
Design/methodology/approach
With data from the World Bank regarding 20 sub-Saharan countries gathered between 2010 and 2018, this study analysed 34 indicators composing 11 United Nations Sustainable Development Goals (SDGs). Afterwards, the authors grouped them by the TBL pillars and evaluated the influence of FDI inflows on their scores using panel data models.
Findings
The results show a positive and significant correlation between the TBL pillars, with the highest correlation being between the environmental and economic pillars. On the other hand, FDI has no significant influence on the TBL pillars.
Practical implications
This study could improve foreign investment legislation/regulation in sub-Saharan African countries, potentially impacting the sustainability these investments should generate.
Social implications
This study contributes to understanding how FDI implies sustainability. The results suggest that governments, non-governmental organisations and other competent entities need to adjust their actions in these countries so that foreign companies sustainably exploit the resources.
Originality/value
This study brings to the current arena an emerging theme: FDI and sustainability in African countries, particularly in sub-Saharan countries. This subject in developing countries is still under-researched.
Keywords
Acknowledgements
An earlier version of this paper has been presented at ICARME 2022, Polytechnic of Leiria, Portugal. The authors are grateful for the comments provided by the participants in this session. The authors also wish to thank the anonymous reviewers of this journal for their valuable comments and suggestions provided on earlier version of this paper. This research is financed by National Funds of the FCT – Portuguese Foundation for Science and Technology within the project ‘UIDB/04928/2020’ and, under the Scientific Employment Stimulus – Institutional Call CEECINST/00051/2018.
Citation
Martins, R.V., Santos, E., Eugénio, T. and Morais, A. (2023), "Is foreign direct investment caring for sustainability? A look in African sub-Saharan countries", Sustainability Accounting, Management and Policy Journal, Vol. 14 No. 5, pp. 978-1001. https://doi.org/10.1108/SAMPJ-01-2022-0046
Publisher
:Emerald Publishing Limited
Copyright © 2022, Emerald Publishing Limited