Green transition and productive structure in Latin America: the role of innovation, finance, and the energy matrix in ALADI countries
Journal
Frontiers in Environmental Economics
Date Issued
2026-06-22
Author(s)
Morales-Urrutia, Ximena
Solórzano, Melissa
Naranjo-Gaibor, Jefferson Napoleon
Acosta-Vargas, Patricia
Type
Article
Abstract
Introduction
The green transition in Latin America takes place within structurally heterogeneous economies characterized by dependence on primary exports, uneven technological capabilities, and partially diversified energy matrices. This study examines how technological innovation, financial development, renewable energy consumption, trade openness, economic growth, and industrialization influence CO
2
emissions in member countries of the Latin American Integration Association (ALADI).
Methods
A balanced panel dataset covering 11 ALADI countries for the period 2000–2021 was analyzed using a two-step System Generalized Method of Moments (System GMM) estimator. This approach addresses endogeneity, unobserved heterogeneity, and the dynamic persistence of emissions. Additional robustness analyses were conducted using pooled Ordinary Least Squares (OLS) and Random Effects (RE) estimators.
Results
The findings indicate that structural factors are the main determinants of CO
2
emissions. Industrialization and trade openness exert positive and statistically significant effects, highlighting the role of productive structure and international integration in shaping environmental outcomes. Economic growth is also positively associated with emissions, suggesting that production expansion remains linked to environmental pressure. In contrast, technological innovation, renewable energy consumption, and financial development do not exhibit statistically significant effects in the dynamic specification.
Discussion
The results suggest that the green transition in ALADI countries is not automatic and cannot be driven solely by technological progress or financial expansion. Persistent structural characteristics, including carbon-intensive productive systems and patterns of global economic integration, continue to constrain environmental sustainability. Achieving a successful transition therefore requires deeper transformations in productive structures, industrial policies, and energy systems to decouple economic growth from environmental degradation.
The green transition in Latin America takes place within structurally heterogeneous economies characterized by dependence on primary exports, uneven technological capabilities, and partially diversified energy matrices. This study examines how technological innovation, financial development, renewable energy consumption, trade openness, economic growth, and industrialization influence CO
2
emissions in member countries of the Latin American Integration Association (ALADI).
Methods
A balanced panel dataset covering 11 ALADI countries for the period 2000–2021 was analyzed using a two-step System Generalized Method of Moments (System GMM) estimator. This approach addresses endogeneity, unobserved heterogeneity, and the dynamic persistence of emissions. Additional robustness analyses were conducted using pooled Ordinary Least Squares (OLS) and Random Effects (RE) estimators.
Results
The findings indicate that structural factors are the main determinants of CO
2
emissions. Industrialization and trade openness exert positive and statistically significant effects, highlighting the role of productive structure and international integration in shaping environmental outcomes. Economic growth is also positively associated with emissions, suggesting that production expansion remains linked to environmental pressure. In contrast, technological innovation, renewable energy consumption, and financial development do not exhibit statistically significant effects in the dynamic specification.
Discussion
The results suggest that the green transition in ALADI countries is not automatic and cannot be driven solely by technological progress or financial expansion. Persistent structural characteristics, including carbon-intensive productive systems and patterns of global economic integration, continue to constrain environmental sustainability. Achieving a successful transition therefore requires deeper transformations in productive structures, industrial policies, and energy systems to decouple economic growth from environmental degradation.