The Impact of FDI on CO 2 Emissions in Latin America

Luisa R. Blanco · Fidel González · Isabel Ruiz

171 citations0/0 files storedOxford Development Studies

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Energy, Environment, Economic Growth International Business and FDI Climate Change Policy and Economics

Abstract

This paper uses panel Granger causality tests to study the relationship between sector-specific foreign direct investment (FDI) and CO2 emissions. Using a sample of 18 Latin American countries for the period 1980–2007, we find causality running from FDI in pollution-intensive industries (“the dirty sector”) to CO2 emissions per capita. This result is robust to controlling for other factors associated with CO2 emissions and using the ratio of CO2 emissions to GDP. For other sectors, we find no robust evidence that FDI causes CO2 emissions.

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References

2001Econometric Analysis of Cross Section and Panel Data 2003Testing for unit roots in heterogeneous panels 1991Environmental Impacts of a North American Free Trade Agreement 1988Estimating Vector Autoregressions with Panel Data 1998Is Free Trade Good for the Environment?1995Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?1995How Does Foreign Direct Investment Affect Economic Growth?2003Moving to greener pastures? Multinationals and the pollution haven hypothesis

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