The impact of Greenfield FDI on Economic Growth and Environmental Performance in African Countries
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Greenfield FDI, CO Emissions, Extractive Industries, Services Sector
Abstract
This paper explores the dynamics of greenfield Foreign Direct Investment (FDI) in Africa, focusing on its potential to drive sustainable economic growth and enhance environmental performance. While greenfield FDI offers significant opportunities for job creation and infrastructure development, it also poses challenges related to environmental degradation. Utilizing unbalanced panel data from 43 African countries between 2003 and 2023, the study employs fixed and random effects models to explore the impact of greenfield FDI on GDP growth and Carbon dioxide (CO₂) emissions across various sectors. The findings revealed that while greenfield FDI inflows generally correlate with increased economic growth, their relationship with CO₂ is complex, with significant variations across sectors. Notably, greenfield FDI in manufacturing demonstrates a potential for emissions reduction, whereas the services sector raises environmental concerns. The study provides critical insights for policymakers in African countries.
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