Foreign Direct Investment and Renewable Energy Consumption: Evidence from Latin American Countries

This study investigates the effect of foreign direct investment (FDI) on renewable energy consumption in 13 Latin American countries during the period 2000–2021. In a context where the region faces significant challenges in transitioning to a cleaner energy matrix, FDI emerges as a key tool to facilitate the adoption of renewable technologies. However, the relationship between FDI and renewable energy consumption has not been sufficiently explored, particularly within the Latin American context. To address this gap, a panel data regression model was employed, including interactions with moderating variables such as economic growth and CO₂ emissions. The main findings indicate that FDI positively impacts renewable energy consumption, especially in economies with high economic growth. However, in countries with high levels of CO₂ emissions, the positive effect of FDI is diminished, suggesting the need for public policies that direct FDI toward more sustainable projects. These results highlight the importance of a favorable macroeconomic environment and a robust regulatory framework to maximize the benefits of FDI in the energy transition of Latin America.