Sovereign Sustainability, Institutions, and FDI: Evidence from an EESG Framework

Sovereign Sustainability, Institutions, and FDI: Evidence from an EESG Framework | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Sovereign Sustainability, Institutions, and FDI: Evidence from an EESG Framework Sana Saleem, Pang Wei Loon, Gamini Premaratne, Khalid Ahmed, Ahmed M. Khalid This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-8839305/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This research enhances the traditional ESG methodology by using a comprehensive sovereign-level EESG framework, which includes the economic, environmental, social, and governance elements influencing national sustainability performance. We evaluate the impact of EESG competencies on foreign direct investment (FDI) and its implications for multinational business models, employing an annual panel of 94 advanced and developing nations from 2000 to 2022. To mitigate endogeneity and path dependence, we utilize a two-step system GMM to estimate dynamic FDI equations and develop a clear EESG score. The findings indicate that superior EESG performance significantly enhances FDI inflows. In developing nations, the Environmental and Social pillars gain prominence, whereas in rich nations, the Governance and Economic pillars have greater influence. The results remain robust when employing reduced-instrument GMM, Driscoll-Kraay fixed-effects, and other EESG weightings. Model diagnostics (AR(2), Hansen) further validate the accuracy of the requirements. From the perspective of the "new business model," the evidence indicates that sovereign sustainability enhances risk pricing, strengthens policy-institutional synergies influencing multinational investment strategies, and increases the reliability of the supply chain. The article demonstrates that EESG constitutes a more comprehensive framework for sustainability, altering our perception of the benefits associated with a country's geographical position in a dynamic global investment landscape. JEL Classification Codes: Q56, F21, O19 Sustainability Foreign Direct Investment Economic Development Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-8839305","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":593941231,"identity":"917fdf56-5fd7-4b80-af5f-efcd29181e8a","order_by":0,"name":"Sana Saleem","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA2klEQVRIie3QMQrCQBBA0QkLqTbargh6hRELCRZeJVZpErAKlkJgq2AdQe8QbzBhwWrVVtDCCwgpbUQTO5sYsLHYX0z3YGYATKY/rN1OgAp89kAAAthQzfo6qbbydM6GzQlSwBTXbLpoTID2pBxp+9k5zqCIFIy6i3phxUsv30geZpfdzEoPCtw11RMGGukmRZidAmSOVIAnr57YECA5En2syKMJ4SXJufa8N7GaECE0lk+mwaq8JU8OPnfTL2RyTIZFgdRvnePt9R6NeyPxhXxE701NJpPJ9Hsv0FhNyMeaSHMAAAAASUVORK5CYII=","orcid":"","institution":"Universiti Brunei Darussalam","correspondingAuthor":true,"prefix":"","firstName":"Sana","middleName":"","lastName":"Saleem","suffix":""},{"id":593941233,"identity":"ae7371ea-be19-452b-9b23-3929d6ff9806","order_by":1,"name":"Pang Wei Loon","email":"","orcid":"","institution":"Universiti Brunei Darussalam","correspondingAuthor":false,"prefix":"","firstName":"Pang","middleName":"Wei","lastName":"Loon","suffix":""},{"id":593941234,"identity":"1a1c56ff-2653-4e43-a5b1-1f74b0608099","order_by":2,"name":"Gamini Premaratne","email":"","orcid":"","institution":"Universiti Brunei Darussalam","correspondingAuthor":false,"prefix":"","firstName":"Gamini","middleName":"","lastName":"Premaratne","suffix":""},{"id":593941235,"identity":"0d930a99-53b4-465e-908c-41ae92c92b50","order_by":3,"name":"Khalid Ahmed","email":"","orcid":"","institution":"Universiti Brunei Darussalam","correspondingAuthor":false,"prefix":"","firstName":"Khalid","middleName":"","lastName":"Ahmed","suffix":""},{"id":593941236,"identity":"6d1231c6-5ff2-47bb-a9a4-6276c4869c47","order_by":4,"name":"Ahmed M. 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