Is foreign direct investment caring for sustainability? A look in African sub-Saharan countries

Abstract

Purpose Business politics and social and economic policies in the past decades brought us to the inevitability of change. Foreign direct investment (FDI) plays a vital role in this change as it is a tool for international business management in a global world. The relationship between FDI and sustainability in sub-Saharan countries with lower incomes has not yet been sufficiently studied, so this study aims to bring some more conclusions to the discussion. Thus, the main objective is to understand if FDI effectively influences the so-called triple bottom line (TBL) pillars of sustainability. Design/methodology/approach With data from the World Bank regarding 20 sub-Saharan countries gathered between 2010 and 2018, this study analysed 34 indicators composing 11 United Nations Sustainable Development Goals (SDGs). Afterwards, the authors grouped them by the TBL pillars and evaluated the influence of FDI inflows on their scores using panel data models. Findings The results show a positive and significant correlation between the TBL pillars, with the highest correlation being between the environmental and economic pillars. On the other hand, FDI has no significant influence on the TBL pillars. Practical implications This study could improve foreign investment legislation/regulation in sub-Saharan African countries, potentially impacting the sustainability these investments should generate. Social implications This study contributes to understanding how FDI implies sustainability. The results suggest that governments, non-governmental organisations and other competent entities need to adjust their actions in these countries so that foreign companies sustainably exploit the resources. Originality/value This study brings to the current arena an emerging theme: FDI and sustainability in African countries, particularly in sub-Saharan countries. This subject in developing countries is still under-researched.