Economic Growth and Environmental Sustainability in Latin American Countries: A Green GDP Approach

Abstract

Since the second half of the twentieth century, advancing economic growth in global economies has led to a significant increase in environmental concerns. In this context, it has become evident that widely used socioeconomic indicators do not include variables related to the environment and other social issues, such as labor and education. Therefore, it is necessary to reflect on and develop new indicators that address these aspects, with Green GDP being a prominent example of how to bridge this gap. The aim of this study is to analyze the relationship between economic growth and environmental sustainability in Latin American countries by comparing the growth rates of traditional GDP and Green GDP across twenty selected countries. The methodology involved estimating Green GDP, which adjusts traditional GDP by excluding the cost of natural resource consumption and environmental depletion. Data were gathered from reputable sources, such as the World Bank, the Australian Energy Regulator, the Latin America and Caribbean Energy Hub, and Global Petrol Prices. The main findings indicate that the growth rate of Green GDP was higher than that of traditional GDP in the analyzed sample. Regionally, Central American countries showed significantly better results than South American countries. It can be concluded that most Latin American countries demonstrated more sustainable development, with the results suggesting that sustainability is, to some extent, accompanying economic growth in the region.

Keywords:
Green GDP; Economic growth; Latin America; Sustainable development; Environmental indicators