How can economic instruments of climate policy be directed through foreign direct investment?

Client/Funding Institution

Anniversary Fund of the Oesterreichische Nationalbank


The mechanism through which the policy maker can foster novel green and environmental technologies via FDI is the main focus of the project. It comprehensively studies this by analysing in three work packages how FDI is determined in the EU and how it can help to diffuse technology. The first work package analyses which factors at the three levels of region, industry and firm determine FDI in firms located in the EU. The second work package analyses how FDI affects productivity growth and employment growth at both the firm level and the regional sector level. In the third work package the diffusion of knowledge, technology and know-how of FDI is analysed, which could lead to green and environmental innovation and finally patenting of these technologies. In both the second and the third work package the indirect impact of FDI on domestically owned firms is analysed separately from the impact of FDI on the whole regional sector, including foreign-owned firms.

Funded by the Anniversary Fund of the Oesterreichische Nationalbank (Project No. 18800).


October 2022 - March 2025

wiiw team Leader

Mahdi Ghodsi

wiiw Staff

Birgit Buschbom, Chiara Castelli, Javier Flórez Mendoza, Mario Holzner, Branimir Jovanović, Robert Stehrer

Keywords: Foreign direct investment, climate change, environmental technology, patenting, knowledge spillovers, productivity growth

Countries covered: EU

Research Areas: International Trade, Competitiveness and FDI