TY - JOUR
T1 - The role of foreign direct investment and green technologies in facilitating the transition toward green economies in Latin America
AU - Hernández Soto, Gonzalo
N1 - Publisher Copyright:
© 2023 Elsevier Ltd
PY - 2024/2/1
Y1 - 2024/2/1
N2 - This study investigates the role of foreign direct investment (FDI) in facilitating the transition toward low carbon societies in Latin America from 1990 to 2022, in order to investigate the effects of FDI among the green transition process and contribute to the design of new ad hoc green FDI policies. Additionally, we introduce the Low Carbon Transition Curve hypothesis as a framework for understanding the relationship between income and the transition to green economies in the selected countries. Through the application of cointegration regression analysis, preceded by the examination of unit roots and cointegration, we uncover notable findings. Our results indicate that the impact of FDI on the consumption of renewable energy exhibits heterogeneity across Latin American countries, as evidenced by the lack of statistical significance in the renewable/fossil fuel mix consumption of energy. However, it is important to note that FDI has a positive and significant effect on the promotion of renewable energy consumption. Furthermore, our analysis confirms the statistical significance of the income-low carbon transition hypothesis across all regression models, suggesting that income per capita plays a pivotal role as a driving factor in countries' transition to green economies. In light of these findings, it is recommended that countries utilize FDI to reduce their dependency on fossil fuels by offering incentives for green FDI, which can contribute significantly to the transition process. These practical implications can guide decision-making processes and support the implementation of measures that contribute to a more sustainable and environmentally conscious energy sector in Latin America.
AB - This study investigates the role of foreign direct investment (FDI) in facilitating the transition toward low carbon societies in Latin America from 1990 to 2022, in order to investigate the effects of FDI among the green transition process and contribute to the design of new ad hoc green FDI policies. Additionally, we introduce the Low Carbon Transition Curve hypothesis as a framework for understanding the relationship between income and the transition to green economies in the selected countries. Through the application of cointegration regression analysis, preceded by the examination of unit roots and cointegration, we uncover notable findings. Our results indicate that the impact of FDI on the consumption of renewable energy exhibits heterogeneity across Latin American countries, as evidenced by the lack of statistical significance in the renewable/fossil fuel mix consumption of energy. However, it is important to note that FDI has a positive and significant effect on the promotion of renewable energy consumption. Furthermore, our analysis confirms the statistical significance of the income-low carbon transition hypothesis across all regression models, suggesting that income per capita plays a pivotal role as a driving factor in countries' transition to green economies. In light of these findings, it is recommended that countries utilize FDI to reduce their dependency on fossil fuels by offering incentives for green FDI, which can contribute significantly to the transition process. These practical implications can guide decision-making processes and support the implementation of measures that contribute to a more sustainable and environmentally conscious energy sector in Latin America.
KW - Energy consumption
KW - FDI
KW - Fossil fuel dependency
KW - Green economies
KW - Latin America
KW - Low carbon transition
UR - http://www.scopus.com/inward/record.url?scp=85179613323&partnerID=8YFLogxK
U2 - 10.1016/j.energy.2023.129933
DO - 10.1016/j.energy.2023.129933
M3 - Article
AN - SCOPUS:85179613323
SN - 0360-5442
VL - 288
JO - Energy
JF - Energy
M1 - 129933
ER -