Promotion of green economic growth in post-Soviet countries: Role of foreign direct and portfolio investments

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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.

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    • 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)
    • Conceptualization
      Bayali Atashov, Elnura Mammadova, Elshan Ibrahimov
    • Formal Analysis
      Bayali Atashov, Elnura Mammadova, Elshan Ibrahimov
    • Investigation
      Bayali Atashov
    • Methodology
      Bayali Atashov, Elnura Mammadova, Elshan Ibrahimov
    • Software
      Bayali Atashov, Elshan Ibrahimov
    • Validation
      Bayali Atashov, Elshan Ibrahimov
    • Visualization
      Bayali Atashov, Elshan Ibrahimov
    • Writing – review & editing
      Bayali Atashov
    • Funding acquisition
      Elnura Mammadova
    • Project administration
      Elnura Mammadova
    • Resources
      Elnura Mammadova
    • Supervision
      Elnura Mammadova
    • Writing – original draft
      Elnura Mammadova
    • Data curation
      Elshan Ibrahimov