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<p>Foreign direct investment (FDI), channeled effectively, has the potential to alleviate environmental pressures and strike a balance between economic advancement and environmental preservation. However, there has not yet been a study examining the impact of sustainable FDI and FDI inflows into key sectors, such as agriculture, manufacturing, and services on the environment in Africa. This study addresses the literature gap by exploring a dataset spanning 53 African countries from 1973 to 2021. Our findings reveal that environmental regulation plays a crucial moderating role in enhancing the positive impact of FDI on environmental quality in the agriculture, manufacturing, and service sectors. Additionally, we found that the channel through which FDI impacts environmental quality is sustainable FDI because of its power to reduce environmental degradation. These results highlight the need for targeted policies and sustainable FDI practices to promote greener economic growth and mitigate environmental degradation in Africa.</p>

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Sectoral FDI and environmental sustainability in Africa: the role of sustainable investment

  • 期刊论文

  • 出版模式：

    开放获取

  • 发表日期：

    2025年9月8日

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  • Abdulrasheed Zakari,
  • Thanh Le,
  • Rabindra Nepal

摘要

Foreign direct investment (FDI), channeled effectively, has the potential to alleviate environmental pressures and strike a balance between economic advancement and environmental preservation. However, there has not yet been a study examining the impact of sustainable FDI and FDI inflows into key sectors, such as agriculture, manufacturing, and services on the environment in Africa. This study addresses the literature gap by exploring a dataset spanning 53 African countries from 1973 to 2021. Our findings reveal that environmental regulation plays a crucial moderating role in enhancing the positive impact of FDI on environmental quality in the agriculture, manufacturing, and service sectors. Additionally, we found that the channel through which FDI impacts environmental quality is sustainable FDI because of its power to reduce environmental degradation. These results highlight the need for targeted policies and sustainable FDI practices to promote greener economic growth and mitigate environmental degradation in Africa.