In this study we aim to test the effects of foreign direct investment (FDI) on carbon emissions (CO₂) in 20 Latin American countries during the period of 1990–2018. Based on the atlas method of the World Bank, we divided the countries into three groups according to their real gross national income per capita: high-income, upper-middle-income and lower-middle-income countries. We used cointegration techniques and causality tests to evaluate the relationship between the variables. To assess the strength of the cointegration vector, we applied the dynamic ordinary least squares (DOLSs) model for individual countries and the dynamic panel ordinary least squares (PDOLSs) model for groups of countries. The results suggest that the entry of FDI into Latin American (LA) countries increases CO₂ emissions, affecting the environmental quality. These findings disagree with the environmental Kuznets curve (EKC) hypothesis but, in contrast, they are in line with the pollution haven hypothesis (PHH). Moreover, we show evidence in long-term equilibrium relationship between FDI input and CO₂ emissions, which is not the case for the short-term equilibrium. Some additional results suggest that FDI flows do not cause the CO₂ emissions in LA countries. The empirical findings suggest policymakers to design policies to “the second-best theory”, targeting FDI flows to their economies to solve economic problems in the short term, but thereafter they may guarantee the reduction in environmental pollution, based on environmentally responsible FDI and stronger regulations. In other words, the transition from a pollution haven to the applicability of the environmental Kuznets curve (EKC). This study contributes with scarce empirical evidence for LA countries in this issue.

This study investigates the relationship between proxies of the international economy and inequality. We focus on 17 Latin American countries during the period of 1991 to 2017. The results suggest the inexistence of a relationship between inequality and the independent variables, with some exceptions that reveal an indirect effect for upper income economies associated to trade and foreign direct investment, after redistributive policies. In the case of upper-middle income economies, findings show an indirect effect between inequality and economic complexity before taxes and transfers. In the end, the policy implications suggest that Latin American countries could openly participate in the international economy process without increasing the levels of inequality.

The convergence hypothesis establishes that the least developed economies tend to grow faster than the developed economies, which implies that they will decrease their disparities over time. This article seeks to verify, through different convergence tests, to determine if in Ecuador the disparities between the economic sectors have decreased over time. For this, we use data, such as the Gross Value Added (GVA) and employment data, in the period 1991 - 2016. Using the standard deviation of each year, we analyse the sigma convergence. Then, using the Ordinary Least Squares method, we run some regressions to determine the beta convergence. In addition, unit root tests are carried out for a panel that consists on the productivity of different economic sectors in 26 years. Likewise, this research analyses the convergence hypotheses using the method proposed by Bernard and Durlauf with the same data panel. The results obtained with the OLS regressions and the unit root tests show the existence of convergence between the economic sectors, while the results obtained with the method proposed by Bernard and Durlauf (1995) present evidence of a divergence process.