Effect of foreign direct investment on sustainable development goals? Evidence from Eurasian countries

ABSTRACT

Public and private sector financing is essential in the movement of capital to achieve all seventeen Sustainable Development Goals (SDGs) by the United Nations members by 2030. Foreign direct investment (FDI) is considered the primary source of external financing in the private sector. FDI accelerates the economic growth of any country by mobilising capital, increasing labour productivity, technological advancements, etc. The present paper aims to study the potential effect of FDI on Sustainable Development in Eurasian countries. Our research considers a sample of 78 Eurasian countries, further distinguished by their income classes. Considering the neoclassical theory of FDI, suggests that FDI will lead to economic growth in the recipient country through flows of capital injections, higher labour growth, productivity and technological advancement. In this study, the variables related to government expenditures are considered to predict a positive association with the SDG index variable. We applied a fixed effects regression model to investigate the relation between FDI and SDG index. Our findings reveal that there is a positive and significant effect of FDI on the SDG index. Furthermore, our results also indicate that the role of FDI is more decisive and fundamental the lower the income class of the countries. Our research contributes to the current literature on Sustainable Development. We believe that our research paper will serve as a base for policy recommendations and future research studies on the influence of FDI on sustainable development for Eurasian countries.

KEYWORDS:

• External financing
• sustainable development
• foreign direct investment
• Eurasian countries

Disclosure statement

No potential conflict of interest was reported by the author(s).