Abstract
Green Foreign Direct Investment (GFDI) is often characterized as foreign investment aimed at promoting positive environmental outcomes. However, current literature lacks conceptual clarity and theoretical precision, with definitions varying significantly across studies and empirical applications. This paper critically deconstructs existing interpretations of GFDI, highlighting inconsistencies and gaps in scope, measurement, and conceptualization. It proposes a more theoretically grounded definition of GFDI, emphasizing two fundamental dimensions: Green & FDI. Green Dimension: refers to investments that contribute to environmentally sustainable outcomes, which includes two main dimensions: 1) Green Industries and Services: Investments in sectors such as renewable energy, pollution control, and environmental services, and 2) Environmental Processes: Investments in cleaner production techniques, energy efficiency, and green technology adoption. FDI Dimension: This represents the mode of foreign investment, distinguishing between 1) Greenfield Investments and 2) M&A. The paper also introduces a multi-level framework identifying key moderators influencing the outcomes of GFDI at the country, industry, and firm levels. By challenging reductionist views and emphasizing contextual complexity, this framework offers a more comprehensive understanding of GFDI's potential impact and limitations.