Promotion of green economic growth in post-Soviet countries: Role of foreign direct and portfolio investments
-
DOIhttp://dx.doi.org/10.21511/ppm.21(4).2023.23
-
Article InfoVolume 21 2023, Issue #4, pp. 288-303
- Cited by
- 252 Views
-
51 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Green economic growth ensures the country’s wealth and population well-being with decreasing ecological damages. This strategy requires effective government policy to push economic agents to environmentally friendly behavior and significant financial resources to invest in technological modernization. The study aims to assess whether promotion of green economic growth in post-Soviet countries depends on direct and portfolio investment. The paper develops the index of green economic growth performance considering traditional economic growth, social, and environmental indicators. To determine the contribution of direct and portfolio investments in the promotion of green economic growth performance, regression equations (for the panel of countries as a whole and each country in particular) are developed. All models are supplemented with traditional economic growth control variables (GDP growth, inflation, gross fixed capital formation, trade). The information base is public data from the World Bank for the sample of 13 post-Soviet countries for 2000–2021. It was revealed that Estonia and Latvia have the highest level of green economic growth performance, while Ukraine, Uzbekistan, and Kazakhstan have the lowest. The most effective country (Latvia) uses its green economic growth potential only for 62.33%. Modeling results do not confirm the significance of foreign and portfolio investment contributions in promoting green economic growth in most post-Soviet countries (portfolio investments boost green economic growth in Estonia and Moldova, while foreign direct investments contribute to green economic growth in Ukraine). These results might be explained by a lack of institutional capacity and government efficiency to ensure effective absorption of investments.
- Keywords
-
JEL Classification (Paper profile tab)Q01, E60, O47, E22, С23
-
References51
-
Tables4
-
Figures2
-
- Figure 1. Scree plot of eigenvalues after principal component analysis
- Figure 2. Index of Green Economic Growth Performance (IGEGP) for post-Soviet countries in 2000–2021, units
-
- Table 1. Principal component analysis
- Table 2. Identification of weighting coefficients
- Table 3. Regression results for 13 post-Soviet countries
- Table A1. Regression results on green economic growth dependence on investment inputs (country-specific)
-
- Alam, A., Ratnasari, R. T., Jannah, I. L., & El Ashfahany, A. (2023). Development and evaluation of Islamic green financing: A systematic review of green sukuk. Environmental Economics, 14(1), 61-72.
- Ali, I., Naushad, M., & Alasmri, H. J. (2023). Effect of CSR activities on customers’ purchase intention: The mediating role of trust. Innovative Marketing, 19(2), 155-169.
- Apalkova, V., Tsyganov, S., Chernytska, T., Meshko, N., & Tsyganova, N. (2021). Evaluating the economic and ecological effects of investment projects: A new model and its application to smartphone manufacturing in Europe. Investment Management and Financial Innovations, 18(4), 252-265.
- Arfara C., & Samanta, I. (2023). Exploring the impact of internal marketing practices on the commitment to “green” intellectual capital. Innovative Marketing, 19(2), 198-210.
- Bardy, R., & Rubens, A. (2022). Weighing externalities of economic recovery projects: An alternative to green taxonomies that is fairer and more realistic. Business Ethics and Leadership, 6(3), 23-34.
- Bilan, Y., Tiutiunyk, I., Lyeonov, S., & Vasylieva, T. (2020). Shadow economy and economic development: A panel cointegration and causality analysis. International Journal of Economic Policy in Emerging Economies, 13(2), 173-193.
- Bogdan, T., & Lomakovych, V. (2021). Financialization of the global economy: Macroeconomic implications and policy challenges for Ukraine. Investment Management and Financial Innovations, 18(1), 151-164.
- Brychko, M., Bilan, Y., Lyeonov, S., & Streimikiene, D. (2023). Do changes in the business environment and sustainable development really matter for enhancing enterprise development? Sustainable Development, 31(2), 587-599.
- Bublyk, Y., Borzenko, O., & Hlazova, A. (2023). Cryptocurrency energy consumption: Analysis, global trends and interaction. Environmental Economics, 14(2), 49-59.
- Carril-Caccia, F., & Pavlova, E. (2018). Foreign direct investment and its drivers: A global and EU perspective. ECB Economic Bulletin, 2018(4).
- Clements, L., Dai, L., & Nicolle, W. (2022). Investing in the green economy 2022. Tracking growth and performance in green equities. FTSE Russell.
- Filipava, L., & Murshudli, F. (2023). The development of the global green finance market: The role of banks and non-banking institutional investors. In N. Naifar & A. Elsayed (Eds.), Green Finance Instruments, FinTech, and Investment Strategies: Sustainable Portfolio Management in the Post-COVID Era (pp. 27-46). Springer International Publishing.
- Iastremska, O., Strokovych, H., & Gasimov, F. (2023). Relationship of investment in innovation and logistics activity in the conditions of the experience economy development. Marketing and Management of Innovations, 1, 12-23.
- Ibraghimov, E. A. (2022). Management of innovation in Azerbaijan: Relationships with competitiveness and sustainable development. Marketing and Management of Innovations, 1, 247-256.
- Kaya, H., Kwok, J. S., & LaTurner, J. (2023). Experiential learning through the creation of an investment lab. Financial Markets, Institutions and Risks, 7(1), 16-25.
- Korneyev, M. (2019). Identification of dependencies between the imbalances of financial resources and investment flows in the eastern European economies. Public and Municipal Finance, 8(1), 1-10.
- Kurbet, M., & Korol, S. (2023). Analysis of environmental aspects of social responsibility of trade enterprises and their reflection in the report. Financial and Credit Activity: Problems of Theory and Practice, 1(48), 206-217. (In Ukrainian).
- Leonov, S. V., Vasylieva, T. A., & Tsyganyuk, D. L. (2012). Formalization of functional limitations in functioning of co-investment funds basing on comparative analysis of financial markets within FM CEEC. Actual Problems of Economics, 134(8), 75-85.
- Lomachynska, I., Babenko, V., Yemets, O., Yakubovskiy, S., et al. (2020). Impact of the foreign direct investment inflow on the export growth of the Visegrad group countries. Estudios De Economia Aplicada, 38(4).
- Lyulyov, O., Lyeonov, S., Tiutiunyk, I., & Podgórska, J. (2021). The impact of tax gap on macroeconomic stability: Assessment using panel VEC approach. Journal of International Studies, 14(1), 139-152.
- Makarenko, I., Bilan, Y., Streimikiene, D., & Rybina, L. (2023). Investments support for Sustainable Development Goal 7: Research gaps in the context of post-COVID-19 recovery. Investment Management and Financial Innovations, 20(1), 151-173.
- Makohon, V., Radionov, Y., & Adamenko, I. (2020). Investment policy of the state as a tool for economic growth of the country. Problems and Perspectives in Management, 18(3), 245-254.
- McKinsey & Company (2022). The net zero transition: What it would cost, what it could bring.
- Melnyk, L., Kubatko, O., Piven, V., Klymenko, K., & Rybina, L. (2021). Digital and economic transformations for sustainable development promotion: A case of OECD countries. Environmental Economics, 12(1), 140-148.
- Moskalenko, B., Lyulyov, O., & Pimonenko, T. (2022). The investment attractiveness of countries: Coupling between core dimensions. Forum Scientiae Oeconomia, 10(2), 153-172.
- Murshudli, F.F. (2023) Green banking for sustainable development. Foresight and STI Governance, 17(2), 82-94.
- Naumenkova, S., Mishchenko, V., & Mishchenko, S. (2022). Key energy indicators for sustainable development goals in Ukraine. Problems and Perspectives in Management, 20(1), 379-395.
- Njegovanović, A. (2023). Financial evolution and interdisciplinary research. Financial Markets, Institutions and Risks, 7(1), 71-95.
- Olonila, A., Amassoma, D., & Babatunde, B.O. (2023). Impact of monetary policy on credit and investment in Nigeria (1981–2020). Financial Markets, Institutions and Risks, 7(1), 136-144.
- Pawar, D. S., & Munuswamy, J. (2022). The linkage between green banking practices and green loyalty: A customer perspective. Banks and Bank Systems, 17(3), 201-212.
- Ramli, M., Boutayeba, F., & Nezai, A. (2022). Public investment in human capital and economic growth in Algeria: An empirical study using ARDL approach. SocioEconomic Challenges, 6(2), 55-66.
- Sahioun, A., Bataineh, A. Q., Abu-AlSondos, I. A., & Haddad, H. (2023). The impact of green marketing on consumers’ attitudes: A moderating role of green product awareness. Innovative Marketing, 19(3), 237-253.
- Shumilo, O., Babenko, V., Ocheredko, O., Nalyvaiko, N., Sukhoniak, S., & Fedorova, H. (2022). Analysis of the current state of investment activity in Ukraine: Macro-and micro-level. WSEAS Transactions on Business and Economics, 19, 1271-1279.
- Sineviciene, L., Kubatko, O. V., Sotnyk, I. M., & Lakstutiene, A. (2019). Economic and environmental performance of post-communist transition economies. In M. Bilgin, H. Danis, E. Demir, & U. Can (Eds.), Eurasian Economic Perspectives (pp. 125-141). Springer.
- Sotnyk, I., Kurbatova, T., Romaniuk, Y., Prokopenko, O., Gonchar, V., Sayenko, Y., Prause, G., & Sapiński, A. (2022). Determining the optimal directions of investment in regional renewable energy development. Energies, 15(10), 3646.
- Sotnyk, I., Kurbatova, T., Trypolska, G., Sokhan, I., & Koshel, V. (2023). Research trends on development of energy efficiency and renewable energy in households: A bibliometric analysis. Environmental Economics, 14(2), 13-27.
- Sustainable Development Knowledge Platform. (2022, December). Green economy.
- Tahat, I. A. M. (2022). Association between factors likely to have an influence on foreign direct investment: The case of Jordan. SocioEconomic Challenges, 6(4), 34-45.
- The World Bank. (2012). Inclusive green growth: The pathway to sustainable development.
- The World Bank. (n.d.). DataBank: World Development Indicators.
- Tiutiunyk, I., Cieśliński, W., Zolkover, A., & Vasa, L. (2022). Foreign direct investment and shadow economy: One-way effect or multiple-way causality? Journal of International Studies, 15(4), 196-212.
- Vasilyeva, T., Kuzmenko, O., Kuryłowicz, M., & Letunovska, N. (2021). Neural network modeling of the economic and social development trajectory transformation due to quarantine restrictions during Covid-19. Economics & Sociology, 14(2), 313-330.
- Vasilyeva, T., Yarovenko, H., Babenko, D., Kalicheva, N., Frolova, N., & Shylovtseva, N. (2022). The barycentric model of determining the sustainable growth determinants. Heritage and Sustainable Development, 4(2), 145-164.
- Vasylyeva, T. A., Leonov, S. V., & Lunyakov, O. V. (2014). Countercyclical capital buffer as a macroprudential tool for regulation of the financial sector. Actual Problems of Economics, 158(8), 278-283.
- Vysochyna, A., Molotok, I., Babenko, V., Merezhko, V., Holynska, O., & Rud, I. (2022). Impact of municipal financial resilience on sustainable economic development: Case of Ukraine. Review of Economics and Finance, 20, 662-668.
- Wang, W., Melnyk, L., Kubatko, O., Kovalov, B., & Hens, L. (2023). Economic and technological efficiency of renewable energy technologies implementation. Sustainability, 15(11), 8802.
- Wiguna, M., Indarti, S., Thamrin, & Andreas (2023). Determinants of sustainable development: The role of CSR disclosure. Problems and Perspectives in Management, 21(2), 210-220.
- Yu, Y. (2023). Performance analysis of public investment in Chinese university education based on regional differences and influencing factors. Business Ethics and Leadership, 7(1), 37-49.
- Zeynalli, L., Huseynli, G., & Huseynli, M. (2022). The impact of the innovation on the economy: An empirical analysis for Azerbaijan. SocioEconomic Challenges, 6(4), 21-33.
- Ziky, M., & El-Abdellaoui, L. (2023). Can sustainable development goals go hand in hand with economic growth? Evidence from Morocco. Problems and Perspectives in Management, 21(3), 656-670.
- Zolkover, A., Tiutiunyk, I., Babenko, V., Melnychuk, M., Ivanchenkova, L., & Lagodiienko, N. (2022). The quality of tax administration, macroeconomic stability and economic growth: Assessment and interaction. Review of Economics and Finance, 20, 654-661.