Foreign Direct Investment and cost of sustainable development goals : implications for FDI decision makers

Policy makers struggle to understand the limited impact of FDI on achieving Sustainable Development Gaols (SDG). However, they overlook the fact that FDI like any other investment decision is affected by the relative costs and benefits considerations. This study explores this aspect and notes that to align and encourage FDI to be more sustainable, policy makers either need to contribute towards these costs or provide substantial benefits. Using panel data on five countries for 19 years, this study finds that costs of implementing SDG act as detriment to FDI; therefore, if the countries can develop the infrastructure themselves or help foreign investors to do so; then the trend may be reversed. Secondly, this study also finds the existence of pollution haven hypothesis in developed trading economies. Thirdly, it identifies a worrying trend that exhibits negative relationship between educational parity and FDI. This indicates that FDI decision makers view female workforce as a cheap source of labor and are not inclined to incur higher labour costs by paying females equal to men, even if they are equally competent and educated. Therefore, this study recommends having a global regulatory regime to ensure that FDI brings in the wage equality