Analysis of the Impact of Financial Markets on Sustainable Development: How Important is Foreign Direct Investment?

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DOI: https://doi.org/10.28924/2291-8639-23-2025-315
Published: Nov 28, 2025
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My-Linh Thi Nguyen, Analysis of the Impact of Financial Markets on Sustainable Development: How Important is Foreign Direct Investment?, Int. J. Anal. Appl., 23 (2025), 315.

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My-Linh Thi Nguyen

Abstract

This study examines the impact of financial markets on sustainable development in middle-income countries in Asia, with particular attention to the role of foreign direct investment (FDI) in enhancing this relationship. The dataset comprises 26 Asian middle-income countries over the period 2002-2021. Using a Bayesian approach, the estimation results reveal that financial markets play a critical role in promoting sustainable development. Moreover, FDI is found to amplify this effect, representing a novel contribution. These findings highlight the importance for the Asian middle-income countries to further develop their financial markets as a foundation for advancing sustainable development. In addition, greater emphasis should be placed on attracting FDI, which not only supports financial markets in providing resources for sustainable development but also brings advanced technologies and positive signals to host countries. Furthermore, they should implement complementary measures, such as fostering the growth of financial institutions, improving the efficiency of government spending, and stimulating domestic investment.

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