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.
Blanco, Luisa; Gonzalez, Fidel; and Ruiz, Isabel, "The Impact of FDI on CO₂ Emissions in Latin America" (2011). Pepperdine University, School of Public Policy Working Papers. Paper 28.