Foreign direct investment and the waste paradox: When environmental governance lags behind economic growth

Abstract

Background: Economic growth is a primary objective for many countries, including Indonesia. Foreign direct investment (FDI) plays a significant role in driving this growth. However, focusing solely on economic expansion may overlook potential environmental consequences caused by uncontrolled foreign investment. This paper examines how FDI impacts the hazardous and toxic waste management ratio. Methods: The data were analyzed using descriptive and comparative methods to identify trends, correlations, and variations between FDI realization and key environmental indicators. The descriptive analysis summarizes data using tables, line charts, and ratios to clearly illustrate changes over time. To guide the analysis, this study adopts Miles and Huberman’s Interactive Model, providing a flexible yet systematic framework for qualitative data interpretation. Findings: The analysis reveals that rapid industrialization, particularly in the manufacturing sector, generates substantial hazardous and toxic waste that often exceeds current treatment capacity. Comparative data show that regions with higher FDI inflows correspond to higher waste generation, highlighting gaps in infrastructure, governance, and regulatory enforcement. While some companies have adopted cleaner technologies, the overall B3 management ratio remains insufficient, indicating structural weaknesses in environmental oversight. These findings underscore the need for policies that align economic growth with environmental protection, including stricter monitoring, capacity building, and promotion of green FDI. Conclusion: While FDI has boosted industrial expansion, technology transfer, and employment, hazardous waste management has lagged behind. This gap underscores the importance of integrating environmental sustainability into FDI planning and industrial policy. Novelty/Originality of this Article: This study examines the relationship between inward FDI and hazardous and toxic waste (B3) management ratio, emphasizing the urgent need for greener FDI in Indonesia.