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The effects of foreign direct investment on environmentally related technologies in Latin America

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  • Soto, Gonzalo Hernández

Abstract

This research investigates the environmental impact of foreign financial inflows directed towards the development of environmental technologies and the transition from fossil fuel to renewable resources. The study focuses on the load capacity factor and ecological footprint as indicators, examining data spanning from 1990 to 2022 across 17 Latin American countries. The analysis employs a STIRPAT model as a starting point and employs second-generation estimation methods. Additionally, panel causality tests proposed by Dumitrescu and Hurlin are utilized to explore the causal relationships among the variables. The findings of this study indicate that foreign direct investment (FDI) in Latin America does not result in pollution, with particular significance observed in mitigating the ecological footprint. The interaction between FDI and environmental technologies demonstrates minimal impact on environmental quality. Conversely, the adoption and adaptation of renewable infrastructure in Latin America's transition toward green economies positively affect environmental sustainability. The study highlights the necessity and desirability of implementing measures to promote green FDI to enhance the positive effects of foreign capital investments in the development of green technologies.

Suggested Citation

  • Soto, Gonzalo Hernández, 2024. "The effects of foreign direct investment on environmentally related technologies in Latin America," Resources Policy, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:jrpoli:v:90:y:2024:i:c:s0301420724000783
    DOI: 10.1016/j.resourpol.2024.104711
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