Positive Foreign Direct Investment Research Articles

The nexus between FDI and human development: non-linear evidence from South Asia

PurposeHuman development is critical for fostering economic growth and development. Given the importance of human development, this study examines the asymmetric impact of Foreign Direct Investment (FDI) on human development by decomposing total FDI into positive and negative shocks in five South Asian countries from 1990 to 2021.Design/methodology/approachThe study uses the panel Non-linear Autoregressive Distributive Lag model (NARDL) to examine asymmetric long and short-run effects of FDI. Further, the direction of causality between HDI and FDI is examined using the recently developed (Joudis et al., 2021) panel granger non-causality test.FindingsThe positive and negative FDI shocks positively impact HDI, but positive shocks have a higher effect than negative shocks in the long run. The Wald Test rejects the long-run symmetric effect, confirming the asymmetric relationship between FDI and human development. More importantly, causality results reveal the FDI-led HDI and HDI-led FDI development in South Asia.Practical implicationsFDI should be encouraged by formulating a well-tailored policy intervention. The development policies should be interlinked with FDI policies. Absorptive capacities such as infrastructure facilities, a threshold level of human capital, and institutions should be strengthened to attract higher FDI into high-tech sectors.Originality/valueUnlike the previous empirical studies, this study provides asymmetric evidence between FDI and human development in South Asia.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-05-2023-0380.

Linking foreign direct investment to financial deepening: Evidence from sub‐Saharan Africa

AbstractIn this study, the nexus between Foreign Direct Investment (FDI) and financial deepening is critically examined. The study employed a robust dynamic panel cross‐sectionally augmented distributed lag method for 31 countries in sub‐Saharan Africa (SSA). The results reveal that: (1) a strong significantly positive long run impact of FDI on financial deepening exists; (2) real gross domestic product (GDP), trade openness and government effectiveness stimulate the positive FDI–financial deepening nexus; (3) the strength of the FDI–financial deepening nexus also depends on the percentile position in the income distribution of SSA countries (countries in the upper strata of the income distribution evidently had stronger FDI–financial deepening relations than those in the lower strata and (4) real GDP, trade openness and government effectiveness also enhance financial deepening in SSA. The study recommends that governments in SSA should foster fiscal, financial and regulatory incentives for attracting FDI for improved financial depth in SSA by: strengthening the regulatory frameworks and institutions of governance through the removal of unwarranted governmental interferences in the administration of justice and electoral processes; removing multiple tax regimes; and stabilizing prices and exchange rate volatility via stimulating local productivity and guaranteeing the rule of law, political stability and security of life and property in the region.

Gone with the epidemic? The spatial effects of the Covid-19 on global investment network

The outbreak of Covid-19 epidemic has a prolonged impact on global economic activities. In recent years, many scholars have been motivated to estimate the effects of Covid-19 shock on global foreign direct investment (FDI). However, existing studies have not paid enough attention to the spillover effects caused by the epidemic. Although few academic works have explored the geographic-neighboring spillover effects of epidemic shock on global investment, we further extent the understanding of the spillover effects in an economic network. On the basis of country-month greenfield FDI panels, we construct a spatial Durbin model, and figure out that Covid-19 shock may have positive FDI spillover effects in an economic network via global FDI transfers. Furthermore, we find that such spillovers are greatly conditioned by country-level network position and institutional ties among nations. Our research suggests that global FDI transfers may partly offset economic-adverse effects of the Covid-19 shock. While global countries, especially those in the Global South, should be more closely embedded in the global investment network in such an uncertain environment.

The causality relationship between foreign direct investment and economic growth in RCEP countries

PurposeThe direction of the causality relationship between Foreign Direct Investment (FDI) and economic growth is a highly controversial issue in the literature. There are two basic approaches advocating different causal directions between FDI and growth, which are called hypotheses of FDI-led Growth and Growth-led FDI. The aim of this study is to analyze the causality relationship between FDI and economic growth in RCEP countries and thus make a new contribution to the discussions in the relevant literature. In addition, the results of the study are expected to provide important implications for the policies to be designed for economic growth based on FDI flows to RCEP countries. Thus, by examining the direction of causality between FDI and economic growth in RCEP countries, we aim to provide a new contribution to related literature and make some implications for the policy design process of economic growth in the RCEP area.Design/methodology/approachWe empirically examined the direction of a causal link between FDI and economic growth in the context of Regional Comprehensive Economic Partnership (RPEC) countries in order to test the hypothesis of FDI-led growth and Growth-led FDI. Accordingly, as our main variables of interest, we incorporated the inward foreign direct investment stock to gross domestic product ratio (FDI) and gross domestic product per capita (GDP). Hatemi-J (2012) asymmetric causality test has been employed in the investigation of the direction of causality between FDI and GDP over the period of 1980–2020. Thus, unlike most of the studies investigating the direction of causality between FDI and growth using the linear causality analysis method, our study performed a nonlinear causality analysis.FindingsEmpirical results reveal that the causal relationship between FDI and national income in RPEC countries is non-linear or asymmetric . The results of the symmetric causality test for both from FDI to national income and from national income to FDI are statistically insignificant for all countries. Therefore, this finding obtained from the study provided an important guide to the econometric methods to be used in other studies to be conducted in the same region in the future. Concerning the asymmetric causality relationship from FDI to growth, positive FDI shocks are an important cause of national income in most RCEP countries. However, the effect of negative FDI shocks on national income is quite weak compared to positive shocks. Regarding the asymmetric causality relationship from growth to FDI, positive national income shocks do not create a significant causal relationship with FDI. Similarly, the effects of negative national income shocks on FDI are statistically insignificant. Overall, asymmetric causality test results reveal that positive FDI shocks have an important causal impact on economic growth in most RCEP countries. Thus, the results of econometric analysis mostly support the argument that the FDI-led growth hypothesis rather than the Growth-led FDI hypothesis in RCEP countries. Accordingly, policy-makers in most of the RCEP countries should continue to provide more incentives and facilities to multinational companies in order to ensure constant economic growth.Originality/valueOur study brings a significant difference in the econometric method used compared to most of the other studies in the literature. Existing empirical studies on the direction of causality between FDI and growth mostly use standard Granger-linear causality-type tests to detect the direction of causality among FDI and growth. Unlike most of the studies in the literature, our study adopted a different methodological approach, namely the Hatemi J test to detect the non-linear causality between FDI and economic growth in RCEP countries. Therefore, this paper made a new methodological contribution significantly to the literature focusing on the causal relationship between FDI and economic growth by using a non-linear causality method rather than a linear causality one.

How responsive is the poverty to the foreign direct investment inflows in Nigeria? Evidence from linear and non-linear ARDL

PurposeThe aim is to examine the long run and short run linear and non-linear impact of foreign direct investment (FDI) inflows on poverty in Nigeria from 1980 to 2019.Design/methodology/approachThe Augmented Dickey Fuller, Phillips Perron and Kwiatkowski-Phillips-Schmidt-Shin unit root tests and bounds test were used to tests the series stationarity and co-integration, respectively. Autoregressive Distributive Lag (ARDL) and non-linear and linear autoregressive Distributive Lag (NARDL) estimators are employed to examine the long run and short run impact of the coefficients of the variables and diagnostic check.FindingsThe study finds that the variables are integrated at a level I(0) and the first difference I(I) and co-integrated. The ARDL estimator indicates that FDI significantly reduces poverty in the long and short run. The findings under NARDL shows FDI positive shock and FDI negative shock reduces poverty substantially in the long-short run, respectively. The error correction term is negative and significant.Research limitations/implicationsThis study is limited to a single country (time series) and less informative compared with the panel data study with much informative and free from hetero-scedasticity. Future studies should consider panel data using a similar or dissimilar approach.Practical implicationsFDI inflows stimulate growth, thereby creating job openings, transfer of modern technology and reduce poverty and demonstrate that, if the finding integrated into policy actions, the government would attract FDI inflows for the real sector of the economy.Social implicationsFDI inflows lead to environmental degradation if inferior technology is use in the host economy, especially the weak environmental regulations in Nigeria.Originality/valueThe authors find no study that applied both ARDL and NARDL estimator, selection of variables measurement and time frame for the study in the context of Nigeria.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-08-2020-0530.

Do the determinants of foreign direct investment have a reverse and symmetric impact on foreign direct divestment?

Negative foreign direct investment (divestment) between countries has received little attention in international macroeconomics. This is the first country-level study to investigate whether conventional drivers of bilateral foreign direct investment (FDI) have a reverse, but symmetric, impact on foreign direct divestment (FDD). Using bilateral negative and positive FDI data between 126 countries or territories, from 2005 to 2018, we find that conventional gravity variables that have statistically significant effects on FDI, such as host and source country GDP, distance, and source-country remoteness, have similar-signed effects on FDD, rather than opposite-signed effects. Formal testing of whether coefficients on the determinants of the absolute value of divestment are equal but opposite signed to those for investment rejects this hypothesis. The view that what may lead to more FDI may impede FDD is not supported by our empirical findings.

Mega Sporting Events and Inward Foreign Direct Investment: An Investigation of the Differences Among the Types of Sporting Events and Host Countries

Building on the location advantage theory for international business, the authors used the event study approach, used extensively in the finance literature, to examine the effects of hosting mega sporting events on inward foreign direct investment (FDI) in countries that hosted the Olympic Games, the International Federation of Association Football World Cup, the Union of European Football Associations Championship, and the Asian Games between 1960 and 2018. In general, the authors’ findings suggested that host countries experienced beneficial effects from hosting mega sporting events. Increases in FDI inflows were more pronounced following the hosting announcements and until the event year. Hosting the Summer Olympic Games, the Union of European Football Associations Championship, and the International Federation of Association Football World Cup all drew a high level of positive abnormal FDI, while hosting the Asian Games induced negative abnormal FDI. The effects of hosting mega sporting events on inward FDI were also found to differ between countries. For instance, host countries in the Middle East and North Africa, and Latin America and the Caribbean appeared to benefit more from hosting a mega sporting event.

Infrastructure and the Impact of Foreign Direct Investment (FDI) on Export Diversification: Evidence from Africa

Abstract Since independence, most African countries have sought to achieve economic transformation. Export diversification (ED) has been a crucial instrument toward that goal. To attain this ED objective, governments have adopted several strategies, including tax exemptions and the removal of trade restrictions, intended to attract foreign direct investment (FDI). I hypothesize in this article that the impact of FDI on ED is contingent on the complementary infrastructure available in the host country. Greater availability of infrastructure would attract more ED-enhancing FDI. Using a five-year 1971–2010 panel data on 29 African countries, I estimate a dynamic model involving the usual covariates of the ED equation, including infrastructure and additionally FDI. The estimating methodologies are the generalized least squares (GLS) and the two-step System Generalized Methods of Moments (SYS-GMM). The results indicate that the higher the level of infrastructure, as indicated by the usual measure involving telephone availability, the larger is the positive FDI effect on ED. This is in addition to the favorable independent effect of infrastructure. The findings suggest that, in order for African countries to attract the ED-enhancing FDI type, such infrastructure should be appropriately prioritized.

Be good to thy neighbours: A spatial analysis of foreign direct investment and economic growth in sub‐Saharan Africa

AbstractThis paper employs a spatial dependency framework to examine intermediary roles played by trade, institutional quality and natural resource endowment in determining direct and indirect (spillover) effects of inbound foreign direct investment (FDI) on economic growth. We develop a number of spatial mechanisms to assess how these intermediary factors limit and/or enhance the effect of FDI on economic growth. In particular, we test whether different levels of resource rents, severity of civil conflict and openness to international trade are statistically different in attenuating direct and indirect (spillover) effects of inbound FDI on growth. Last, we conduct a test of asymmetry to investigate whether the effect of FDI on growth is statistically different from zero in three democratic (autocratic) regimes, that is, low democratic (high autocratic), moderate democratic–autocratic and high democratic (low autocratic) societies. A number of insightful contributions to the economic growth‐FDI literature can be extracted from our analyses. First, results indicate that inbound FDIs on their own have positive and significant effect on economic growth. However, the positive FDI effect on growth is significantly dampened by the negative intermediary role of civil conflict. Second, we find that, the more opened sub‐Saharan African economies are to international trade, the greater is the impact of FDI on growth. However, trade among African countries as a share of their economies plays insignificant intermediation role on direct and indirect effects of FDI on growth. Third, we find that an increase in resource rents as a share of the economy significantly reduces direct and spillover effects of inbound FDI on economic growth. Last, our analysis indicates that both low democratic (high autocratic) and high democratic (low autocratic) regimes do accelerate the positive impact of FDI on growth. However, results indicate a slow‐down effect of FDI on growth under moderate democratic–autocratic regimes. This particular finding suggests that the intermediary role of democracy in determining the effect of FDI on economic growth is non‐linear. A number of policy implications can be extrapolated from our analysis. Most importantly, trade policies, which boost integration of sub‐Saharan African countries and open up the continent to the rest of the world, are likely to play major intermediation roles in accelerating the positive effect of FDI on growth.

Examining the FDI–Growth Nexus in BRICS: Panel Data Evidence

The purpose of this article is to examine the relationship between foreign direct investment (FDI) and economic growth in Brazil, Russia, India, China and South Africa (BRICS) economies, which are considered to be the fastest-growing economies and dominant players in the global investment landscape. In order to assess the relationship between the dependent variable (economic growth) and explanatory variables (FDI inflows and other growth determinants), we analyse a 32-year panel data starting from 1987 to 2018 using feasible generalised least squares (FGLS) method. The article found a significant positive FDI impact on economic growth in BRICS. However, exports, human capital and inflation (macroeconomic instability) exert a negative impact on economic growth of BRICS, whereas domestic investments exert a positive impact on growth. JEL Codes: F21, F43, C23, O47

The Influence of Financial Inclusion and Macroeconomic on Foreign Direct Investment (FDI) Flows in The Organization of Islamic Cooperation (OIC) Countries

Foreign capital flows are important factors in the development of sustainable economies, especially in developing countries such as the OIC countries. Lately, the rapid development of the financial sector and macroeconomic stability became a serious concern by foreign investors, where financial inclusion and macroeconomics played an important role in attracting direct foreign capital flows (FDI). The study aims to investigate the role of financial inclusion and macroeconomic variables on the foreign direct flow of capital (FDI) by using data panels in 8 OKI member States during the 2012-2018 time span. The research uses the Fix Effect Model (FEM) Panel data Analysis tool, which is believed to be able to explain the correlation between independent variables and more accurate dependents. As for the results of the study showed that in partial only variable avaibility (the number of branches of the bank/100,000 adults) is a significant positive draws FDI in the OKI country. While on macroeconomic variables the exchange rates have significant negative effect on FDI, while interest rates and economic growth have significant positive relationships in attracting FDI.

How Important Is Foreign Direct Investment To Malaysia And Thailand? Evidence From The Emerging Economies

This study is motivated to investigate the impact of foreign direct investment (FDI) on the economy of Malaysia and Thailand for the past 28 years with a specific focus on examining the strength of relationship between net FDI and three key economic indicators – real Gross Domestic Product (GDP), exchange rates and long-term interest rates. Within the framework of Keynesian Income Theory, this paper deploys both Ordinary Least Squares (OLS) regression and Engle-Granger Cointegration test as estimation tools to model the yearly secondary data from 1992 through 2019. The empirical findings show that net FDI does have some influence on real GDP, exchange rates and long-term interest rates in these two countries. From Pearson correlation coefficient, we observe a strong positive correlation between net FDI and real GDP. It is clear that net positive FDI plays an important role not only in sustaining GDP growth but also in strengthening host country’s exchange rates. Both Malaysia and Thailand must look into devising good trade and investment policies which could attract quality FDI that optimizes scarce national resources in the best possible manner.

Foreign Direct Investment Spillover Effect on China’s Sustainable Development

Abstract The unbalanced growth of FDI in China has seriously affected the coordinated development of China’s regional economies. Therefore, to achieve comprehensive, coordinated and sustainable development, China’s main strategic task is determining how to adopt positive and effective FDI policies to reduce this regional imbalance in FDI. The purpose of this paper is to explore and study the spillover effects of foreign direct investment (FDI) on China’s sustainable development. In this paper, based on the new political economics theory and overflow effects, comparative research and statistical research methods are adopted that combine static and dynamic analysis. Empirical research methods are combined with normative research to analyse the spillover effects of FDI on China’s sustainable development, particularly under the new situation of global crisis and the accompanying difficulties, to determine how to promote China’s FDI and the development of China’s sustainable progress strategy. The study found that in 2018, FDI in China reached a value of 13.466 billion US $, and the year-on-year growth in FDI in recent years has been basically stable at approximately 4 %. Asia is the main source of FDI in China. In 2018, the amount of FDI in Asia reached $109.1938.7 billion, accounting for 83.33 % of the total investment. Hong Kong, with its unique advantages, accounted for 72.12 % of FDI in China. FDI inflows are mainly directed to primary industry and the service sector, and the growth rate of foreign investment in 2016 in these sectors was 68.52 and 170.77 %, respectively, compared with 2007. FDI also mainly flows to the eastern region of China. By the end of 2018, the amount of foreign capital utilized in the eastern region reached $1,622.9 billion, representing 85.4 % of the aggregate FDI in China. The effect of FDI on China mainly focuses on three areas: economic growth, social development and environmental protection. FDI has brought positive spillover effects to China’s sustainable evolution, but with China’s continuous development, especially the change in its economic development mode, it has been consistently exposed to negative spillover effects.

How Does Diversity in Employee and R&D Facilitate FDI Knowledge Spillovers: A Threshold Perspective

This paper examines how the diversity of a firm’s employee composition and R&D structure affect its absorption of foreign direct investment (FDI) spillovers. Using a unique dataset of Chinese firms in Beijing Zhongguancun (ZGC) Science Park from 2005 to 2015, we demonstrate a positive FDI spillover effect on domestic firm innovation. Our empirical results also indicate that a firm’s diverse employee composition and R&D spending can improve its absorptive capacities to learn from foreign firms. By employing a seminal dynamic panel threshold model, we further show that after reaching a certain threshold, the increasing diversity of a firm’s employee composition begins not to affect the relationship between FDI spillovers and its innovation, while a higher diversity of R&D structure turns into a negative moderating effect. Firms therefore need to place more attention on their diverse innovation structures.

Autocratic time horizons and the growth effect of foreign direct investment

AbstractThe positive influence of foreign direct investment (FDI) on host countries' economic growth has been widely debated. Given the mixed empirical evidence, scholars have sought to find the economic preconditions under which FDI spillovers are likely to occur and facilitate economic growth in the host countries. Those preconditions are not exogenously dictated but largely shaped by governments' policy preferences. Particularly in autocracies, an autocrat's policy preferences are the driving force that determines whether a host country is likely to be equipped with growth-friendly institutions and policies. We argue that such economic institutions and policies are dependent on the time horizons of autocrats in power. Our empirical analysis covering 64 autocratic countries from 1970 to 2005 supports our main argument that FDI has a positive effect on growth when autocratic time horizons are sufficiently long, and positive FDI spillovers mainly occur through the protection of property right institutions.

Foreign Direct Investment, Export Performance and Sustainable Development in Nigeria

This study sets out to examine the role of manufacturing sector Foreign Direct Investment (FDI) in the quest for export sector diversification in Nigeria for sustainable development. This objective was achieved by estimating the effects of manufacturing sector FDI on manufactured goods export from Nigeria using the Autoregressive Distributed Lag estimating technique. The study discovered that FDI inflows into the country’s manufacturing sector impacted negatively on manufactured exports in the short run. The short run result nevertheless gave way to a positive and significant influence of FDI on manufactured exports in the long run, indicating that this form of foreign capital is important for manufactured export promotion in Nigeria. The resulting long run positive FDI- spillovers on export performance in Nigeria is in tandem with the neoliberal theoretical viewpoint that developing countries can rely on FDI as ladder to sustainable development. The findings suggest that sustainable development can be enhanced in Nigeria by exploiting the channel of positive spillovers from sector specific FDI inflows. The study concludes that with appropriate policy stance, one important way of pursuing the long run goal of sustainable development is to route FDI inflows in the direction of the country’s manufacturing sector.

Identifying IFDI and OFDI Productivity Spatial Spillovers: Evidence from China

ABSTRACTUsing an original and unique merged large-scale Chinese dataset over 2002–2007, this article investigates the productivity spatial spillover effects from both inward and outward foreign direct investment (FDI) to private-owned domestic firms based on intra- and inter-regional dimensions. Results show strong evidence that the positive outward FDI (OFDI) spillover effect dominates in inter-region, whereas no significant positive effect exists in intra-region. By contrast, no significant spatial spillover effect is observed from inward FDI (IFDI). In addition, there exists the optimum geographical distance on productivity spatial spillovers as a result of the non-linear impact of the geographical proximity. These results are robust after controlling potential endogeneity and to different specifications.

Crowds in or crowds out? The effect of foreign direct investment on domestic investment in Chinese cities

This study investigates the empirical relationship between foreign direct investment (FDI) and domestic investment (DI) in China using a comprehensive city-level panel over the period from 2003 to 2011. System-generalized method-of-moment estimation reveals mixed results. At the national level, FDI neither crowds in nor crowds out DI, indicating a neutral FDI–DI nexus. However, when the full sample is segmented by geographical topology, a positive and significant FDI–DI nexus can be found in eastern and, to a lesser extent, central cities. A negative, although insignificant, association is reported among western cities. Further, the empirical nexus is conditional on several local absorptive capacities including human capital, financial development, and institutional quality. These findings suggest that a region-based FDI strategy in general and local governments should strengthen their absorptive capacities to fully internalize FDI spillovers.

The Relevance of Political Stability on FDI: A VAR Analysis and ARDL Models for Selected Small, Developed, and Instability Threatened Economies

This paper studies the relevance of political stability on foreign direct investment (FDI) and the relevance of FDI on economic growth, in three panels. The first panel contains 11 very small economies; the second contains five well-developed and politically stable economies with highly positive FDI net inflows, while the third is a panel with economies that are prone to political violence or targeted by the terrorist attacks. We employ a Granger causality test and implement a vector autoregressive (VAR) framework within the panel setting. In order to test the sensitivity of the results and avoid robust errors, we employ an ARDL model for each of the countries within every panel. Based upon our results, we conclude that there is a long-term relationship between political stability and FDI for the panel of small economies, while we find no empiric evidence of such a relationship for both panels of larger and more developed economies. Similarly to the original hypothesis of Lucas (1990), we find that FDI outflows tend to go towards politically less stable countries. On the other hand, the empiric methodology employed did not find such conclusive evidence in the panels of politically more developed countries or in the small economies that this paper observes.

We'll All Float On: Global Climate Change-Induced Migration and Financial Flow Estimates

A warming global earth was recently revealed to hold advantages. Based on state-of-the-art welfare function measurements and economic productivity parameters, the economic gains and productivity-efficiency benefits from a warming earth were captured (Puaschunder, 2017a, b). Contemporary Gross Domestic Product (GDP) measurements served as basis for estimations about the productivity of the agriculture, industry and service sectors around the warming globe. Based on the optimal temperatures for the agriculture, industry and service sectors productivity as well as climate projections of the year 2100 under the business as usual path for each country, climate winners and losers were retrieved around the world from now on until the year 2100 (Puaschunder, 2017b) in order to argue for fair climate change benefits distribution around the globe (Puaschunder, 2017a). The climatorial imperative was defined as ethical obligation to avert climate change concertedly (Puaschunder, 2017c). Even if being in a part of the world that is still gaining from a warming climate, people should be striving to avert actions that cause the earth to warm. Based on the categorical imperative, no one should participate in actions with harmful consequences to others. One should only engage in those activities, which consequences one wishes to incur to oneself. The climatorial imperative serves as basis for climate change benefits transfers around the globe (Puaschunder, 2017a). Climate change gains transfer are meant to compensate for losses in global warming losing territories but also to finance incentives for a transition to renewable energy (Puaschunder, 2017a). In order to manifest the established facts that some parts of the world will be gaining from a warming earth and some are vanishingly melting, the following paper investigates climate-induced migration streams and financial flows. Based on a 187 country-strong dataset and under the implicit assumption of an open economy, a significantly positive inflow of migrants was found into the climate change winner countries. A statistically significant correlation holds that there is a positive Foreign Direct Investment (FDI) remaining financial inflow into the winning countries. As a cross validation of the finding of financial inflows into climate change winner countries, a non-significant correlation and independent t-test reveal that there are no significant financial returns in form of remittances to the climate change loser countries. The results target at underlining the importance of climate change benefits transfers to offset the losses incurred in the global warming-burdened areas of the world. Migration and monetary flows are argued to vividly outline the competitive advantages of the climate change winner countries. The paper innovatively integrates two contemporary societal world-wide crises: climate change and migration in order to retrieve future migrant and financial flow prospect predictions but also global governance recommendations. The paper offers the first introduction of climate-induced financial flows, which serve as unique justification for climate benefits transfers around the globe and recognition of climate refugees under the Geneva Convention in order to ensure climate equality in the 21st century.