Abstract
Focusing critically on the effects of the conditions for foreign direct investment on sustainable growth in the recipient country, this paper analyzes the potential for investments in environmental innovations in India. The definition of sustainability applied in this paper incorporates economic development and investment which promotes environmentally and socially friendly production and innovation. As the Indian economy experienced strong growth in GDP in recent years, but is still lagging behind in providing the basic needs of clean water, clean air and proper waste management for households and companies, the necessity for sustainable development exists. From a methodological point of view this paper uses macroeconomic data to evaluate quantitatively the potentials and needs of Indian states. This results in a state ranking showing the potential for sustainable development in selected Indian states, based on economic and environmental indicators.
Highlights
To apply the above definition of sustainable development in a multidimensional framework in a quantitative analysis, 13 indicators have been chosen, which represent the economic potential for investment together with the environmental and socio-economic status of selected Indian states
Given a cost-approach a lower level of wages would lead to a higher ranking of the region. Such a result cannot be argued within the underlying concept of sustainable development that is applied in this paper, which focuses on the simultaneous promotion of economic and social development
The quantitative analysis shows that the indicators chosen provide a valid ranking of the regional potential for sustainable development
Summary
The definition of sustainable development applied in this paper focuses on economic development in combination with improvements in socioeconomic and environmental standards. The following four areas water, air, energy and waste management provide the highest potential for socio-economic and environmental development on the Indian sub-continent. Irrigation lays claim to about 85% of the total water supply, followed by households with 7%, industry with only 2%, energy with 1% and other user groups with 6% (estimates for 2010, Central Water Commission 2007). 90% of the urban and 96% of the rural population have access to water supply near their dwelling Pollution of groundwater by industries, fertilizers, pesticides, and human and animal fecal matter in parts of India is especially problematic for the life quality of the Indian population, and rivers and coastal waters are affected by pollution (Central Pollution Control Board). Two main areas of air pollution can be distinguished: CO2 emissions and RSPM emissions. The energy sector has to be targeted with investments and innovations, as it is a major source of CO2 emissions
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