MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY ------***------ MASTER THESIS THE IMPACTS OF FOREIGN DIRECT NVESTMENT ON SUSTAINABLE DEVELOPMENT GOALS SPECIALISATION: INTERNATIONAL ECONOMICS NGUYEN THIEN THANH THAO Hanoi – 2023 MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY ------***------ MASTER THESIS THE IMPACTS OF FOREIGN DIRECT NVESTMENT ON SUSTAINABLE DEVELOPMENT GOALS Specialisation: International Economics Code: 821422 Full name: Nguyen Thien Thanh Thao Supervisor: Assoc. Nguyen Thi Tuong Anh Hanoi – 2023 i DECLARATION OF ORIGINALITY I declare that this thesis has been composed solely by myself and that it has not been submitted, in whole or in part, in any previous application for a degree. Where other people’s works are used, this has been properly acknowledged and referenced. Hanoi, July 2023 Nguyen Thien Thanh Thao ii ACKNOWLEDGEMENT My master thesis would not have been done without great intellectual and spiritual supports from many important people in my life.
The completion of this thesis has been a long and memorable journey with many ups and downs. I am extremely grateful for all lessons I have learned and all people who have accompanied me through hardship. From the bottom of my heart, I would like to express my thanks for everything all of you have done for me. First of all, I would like to express my great gratitude to my supervisor - Assoc.
Nguyen Thi Tuong Anh for her valuable and constructive suggestions during the development of this work. I would like to express my gratitude to all teachers at the Faculty of Postgraduate Studies, especially to Assoc. Tang Van Nghia, Dr. Cao Thi Hong Vinh and M.
Tran Duc Huy. Without their timely encouragement and support, I might not have completed the full’s master’s programme in International Economics. My sincere thanks go to other professors and lecturers of the Faculty of International Economics - Assoc. Hoang Xuan Binh, Assoc.
Tu Thuy Anh, Dr. Luong Thi Ngoc Oanh, Dr. Ly Hoang Phu and Dr. Vu Thi Phuong Mai who have nurtured and inspired the passion of studying economics in me.
I also would like to express my sincere appreciation to my dearest friends for all supports and motivations. I wish to thank all of my classmates of MIE4B – Mr. Nguyen Tat Binh, Ms. Mai Thi Ngoc Anh, Mr.
Tran Hoang Trung, Mr. Nguyen Duc Phuong, Ms. Dinh Cam Tu, Ms. Phuong Anh Tran and Ms.
Do Quynh Trang for what we have experienced together over the past two years. Words can not express how grateful I am to my family for the care, understanding, patience, for always being there and support me. Dear me, thanks for always doing your best. I am grateful for the way I have supported myself and for all the little achievements I make every day.
iii TABLE OF CONTENTS DECLARATION OF ORIGINALITY. ii TABLE OF CONTENTS. iii TABLE OF ABBREVIATIONS. vi LIST OF FIGURES AND TABLES.
viii SUMMARY OF THESIS RESEARCH RESULTS. THEORETICAL FRAMEWORK AND PRACTICAL BASIS OF THE IMPACTS OF FOREIGN DIRECT INVESTMENT ON SUSTAINABLE DEVELOPMENT GOALS. Overview of foreign direct investment. Definition of foreign direct investment.
Main features of foreign direct investment. Classification of foreign direct investment. The role of foreign direct investment in the host country. Overview of sustainable development goals.
Sustainable development goals: History and implementation process. Global indicator framework for the Sustainable Development Goals. The impacts of foreign direct investment on sustainable development goals: Conceptual framework. FDI Qualities Indicators.
Channel effects of foreign direct investment on sustainable development goals. The impacts of foreign direct investment on sustainable development goals: Conceptual framework. THE IMPACTS OF FOREIGN DIRECT INVESTMENT ON SUSTAINABLE DEVELOPMENT GOALS IN OECD COUNTRIES. Introduction about OECD countries.
Fact of foreign direct investment and sustainable development goals in OECD countries. Overview of OECD Foreign Direct Investment. Assessing OECD countries’ performance on SDGs. The impacts of foreign direct investment on sustainable development goals in OECD countries.
The impacts of FDI on productivity and innovation. The impacts of FDI on job quality and skills. The impacts of FDI on gender equality. The impacts of FDI on carbon emissions.
Assessment of the impacts of foreign direct investment on sustainable development goals in OECD countries. RECOMMENDATIONS TO IMPROVE THE IMPACTS OF FOREIGN DIRECT INVESTMENT ON SUSTAINABLE DEVELOPMENT GOALS IN OECD COUNTRIES. Leverage competition Policy: Incentives-based and Rules-based Competition to attract FDI. Incentives-based competition.
Rules-based Competition. Recommendations to improve the FDI impacts on productivity and innovation. Deliver a well-planned course of action and ensure consistency and harmony in policies concerning the growth of SMEs, innovation, and investment. Ensure that the regulations at both the local and global levels promote a business-friendly environment that encourages productivity and innovation driven by FDI.
Recommendations to improve the FDI impacts on job quality and skills. Offer guidance for strategic planning and guarantee harmonized policies regarding investment, workforce and enhancement of skills. Ensure that regulations support investment and labour market adjustments that create good job opportunities for all and are adapted to a changing world of work. Stimulate labour demand and develop workers’ skills through targeted investment and active labour market policies and programmes.
The resolution of information gaps and reduction of administrative obstacles are vital to ensure investment opportunities are in line with labor market demands. Recommendations to improve the FDI impacts on gender equality. Offer explicit guidance on strategic investments aimed at promoting gender equality. Ensure that local regulations conform with international standards and uphold the positive impact of FDI in advancing gender equality.
Remove barriers and prejudices that limit women's opportunities in the workforce, including biased information and gender stereotypes. Also, offer social support resources to empower women to participate in the workforce. Recommendations to improve the FDI impacts on decreasing carbon emissions. Offer astute direction and ensure congruity in strategies related to investing, emphasizing the importance of extensive planning and efficiency.
Comply with global accords and protocols that strengthen climate goals. National policies and rules should be designed to promote initiatives aimed at mitigating the effects of climate change. Encourage investments and enhance expertise in eco-friendly technology, services, and infrastructure .99 vi TABLE OF ABBREVIATIONS BIT Bilateral Investment Treaty UN Convention on the Elimination of All Forms of CEDAW Discrimination against Women CETA EU-Canada Comprehensive Economic and Trade Agreement CIT Corporate Income Tax CUSBTA Cambodia – US Bilateral Textile Agreement DESA Department of Economic and Social Affairs EC European Commission EIA Environmental Impact Assessment ESG Environmental Social Governance FDI Foreign Direct Investment FTA Free trade agreements G20 Group of Twenty GDP Gross domestic product GHG Greenhouse Gas GPEDC Global Partnership for Effective Development Co-operation GVC Global Value Chains ICT Information and Communication Services IIA International Investment Agreement IIP International Investment Position ILO International Labour Organization ILO International Labor Organization vii IMF International Monetary Fund IPRs Intellectual property rights KPI Key Performance Indicators M&A Mergers and Acquisitions M&E Monitoring and Evaluation MDG Millennium Development Goals MNE Multinational Enterprise NDC Nationally Determined Contribution OECD Organisation for Economic Co-operation and Development OEEC Organization for European Economic Cooperation R&D National research and development RTA Regional Trade Agreement SDG Sustainable Development Goal SEA Strategic Environmental Assessment UN United Nations UNCTAD United Nations Conference on Trade and Development UNFCCC United Nations Framework Convention on Climate Change USMCA United States – Mexico – Canada Agreement VAT Value Added Tax WB World Bank WTO World Trade Organisation viii LIST OF FIGURES AND TABLES Figures: Figure 1. 17 Sustainable development goals.
The impacts of foreign direct investment on sustainable development goals: Conceptual framework. FDI inflows to selected areas, 2005-22 (USD billion). FDI inflows to selected countries, 2021-22 (USD billion). FDI outflows from selected areas, 2005-22 (USD billion).
FDI outflows from selected countries, 2021-22 (USD billion). OECD average distance from achieving SDG targets. Conceptual framework: Impacts of FDI on productivity and innovation. Concentration of FDI based on sectoral productivity and R&D performance.
Productivity premium of foreign firms in OECD and non-OECD economies. Conceptual framework: FDI impacts on job quality and skills development. Foreign firms’ wage and productivity premia in OECD and emerging countries. Conceptual framework: FDI impacts on gender equality in the labour market.
Contribution of FDI to gender equality in wages and employment. Conceptual framework: FDI impacts on carbon emissions .66 ix Tables: Table 1. FDI Qualities by sustainability cluster and outcomes. Lowest OECD average distances to targets and recent trends.
Largest OECD average distances from targets and recent trends. Major international agreements on women’s human rights and gender quality .88 x SUMMARY OF THESIS RESEARCH RESULTS FDI is widely regarded as the principal means of securing external financial support for enterprises operating within the private sector. Prior studies have explored the significant function that FDI assumes in promoting economic advancement or exacerbating environmental deterioration. However, there exists a paucity of academic literature that scrutinizes the effect of FDI on all four pillars of sustainability collectively, with the objective of achieving sustainable development on a global level.
The author elected to engage in a systematic inquiry that integrates both theoretical and practical perspectives, with the aim of addressing the aforementioned gaps and supplying evidence on the essentiality of FDI in attaining SDGs in nations belonging to the OECD. This master thesis is structured as three chapters to offers a more comprehensive analysis of FDI as well as its impact on SDGs. The thesis utilizes qualitative research techniques that encompass a wide range of approaches to collect and combine the latest studies and reports on FDI and global sustainable development, particularly in OECD countries. To achieve the research goals, statistical methods are used along with comparative analysis and data synthesis.
The author cleverly combines theoretical concepts and practical examples, supported by evidence and using historical and logical approaches. This thesis combines international economic theories on FDI with the OECD theoretical framework on SDGs. This methodology forms the foundational framework for the research conducted in this study. The author also employs versatile research methods in examining the concepts and strategies of OECD nations regarding the attraction of FDI sources.
Research results confirm that FDI plays a pivotal role in propelling progress towards the attainment of the SDGs. This initiative possesses the capacity to enhance economic growth and stimulate fresh ideas and advancements, fostering the creation of employment opportunities that adhere to high standards of quality. Furthermore, it serves to encourage the cultivation of human resources, ultimately leading to an improvement in both living conditions and ecological sustainability. By promoting xi linkages between domestic firms and multinational enterprises, it serves as a conduit for domestic firms to access international markets and integrate into global value chains.
It is pertinent to acknowledge that the ramifications of FDI cannot be universally deemed as unequivocally advantageous, given that such consequences exhibit discernible disparities across diverse dimensions of sustainable development. The allocation of FDI among countries has shown divergent levels of advantages, with specific nations enjoying greater benefits in comparison to others. Moreover, within the confines of these respective nations, certain demographic groups have been disproportionately marginalized from reaping the advantages associated with the influx of FDI. Efforts aimed at fostering the mobilization of investments should be aligned with considerations pertaining to the attributes and consequences of investments, including progress made towards achieving the SDGs.
The impact of FDI is largely contingent upon the policies implemented by the host country facilitating the investment. This thesis explores the assessment of the degree to which foreign investment facilitates sustainable development and proposes strategies for optimizing its advantageous outcomes while mitigating possible limitations. The bolstering of Incentives-based and Rules-based Competition is strongly advocated to enhance the effects of FDI on the achievement of SDGs. Additionally, the thesis provides additional guidance regarding climate reform for investment in order to align with the facilitation of achieving the SDGs.