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The Impact Of Fdi On Co₂ Emissions In Latin America, Luisa Blanco, Fidel Gonzalez, Isabel Ruiz

School of Public Policy Working Papers

This paper uses panel Granger causality tests to study the relationship between sector specific FDI and CO₂ emissions. Using a sample of 18 Latin American countries for the 1980-2007 period, we find causality running from FDI in polluting 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.