Green instruments and institutions of the financial system in shaping the structure of foreign direct investment: a theoretical analysis

Abstract

The aim of the article is to develop a conceptual approach to explaining the role of the green financial system in shaping the structure of foreign direct investment through the integration of regulatory, financial, infrastructural, and subnational factors. The study is aimed at overcoming the fragmentation of existing theoretical approaches and forming a coherent analytical framework that makes it possible to explain not only the volume but also the qualitative characteristics of investment flows. The article employs methods of theoretical generalization, comparative analysis, and a systems approach. A structural and logical analysis of academic sources is applied to identify the key directions in the study of the interaction between environmental policy and foreign direct investment. Elements of institutional and spatial analysis are used to construct the conceptual model, enabling the integration of different levels of influence into a unified theoretical framework. A conceptual model is substantiated, according to which the green financial system determines the structure of foreign direct investment through the operation of four interconnected channels: regulatory, financial-market, infrastructural, and institutional-subnational. It is established that their interaction forms a mechanism for the selection, allocation, and spatial concentration of investment flows. It is demonstrated that a key outcome of this system is the transformation of the sectoral specialization of investments, their technological level, and their territorial distribution. It is shown that uneven institutional capacity across regions leads to asymmetric access to green investments and generates cumulative lagging effects. The proposed approach extends theoretical perspectives on the interaction between green financial architecture and international investment processes, enabling a shift from the analysis of individual instruments to an understanding of the systemic logic of their impact. The results obtained can be used to design public and regional policy instruments aimed at shaping the qualitative structure of foreign direct investment. Prospects for further research are associated with the empirical verification of the model and its adaptation to the conditions of transition economies, particularly in the context of Ukraine's post-war recovery.