《《Rethinking Green Versus Conventional Investment Flows in BRIC》.pdf

Rethinking Green Versus Conventional Investment Flows in BRIC+ Countries: Review of Emerging Trends and a Model For Future Research Ivetta Gerasimchuk, PhD Senior Advisor to Trade and Investment Program, WWF-Russia Research Fellow, Cyprus International Institute of Management (CIIM) Abstract Rethinking Green Versus Conventional Investment Flows in BRIC+ Countries: Review of Emerging Trends and a Model for Future Research The article explores the emerging trends and future potential for diverting capital flows from conventional to green activities in Brazil, Russia, India, China, Mexico, and South Africa (BRIC+ countries). At present, Chinese and Indian investors fund both environmentally unfriendly and green projects at a speedy pace, given these two countries’ high rates of gross fixed capital formation and general independence from external financial markets. By contrast, in Mexico, in South Africa, and especially in Brazil and Russia, environmentally sensitive projects to a considerable extent raise funds in the form of foreign loans. Meanwhile, in all BRIC+ countries except Russia, the bulk of green investment comes from domestic sources of funding. While recognizing the accomplishments of the previous research on the subject, the article identifies deficiencies in the available data. The author uses generalizations of evidence from case studies to propose a model for future econometric testing. It is hypothesized that 1) the longer the time horizon of the investment institution is, the sounder the environmental profile of its investments; 2) the more stringent and predictable the environmental regulations in host economies are, the longer the investor’s time horizon is; 3) financial institutions with open and publicly accountable ownership structure