How do economic growth and unemployment affect green development in Latin America nations?

Abstract

Despite mounting environmental pressures, the complex interplay between economic dynamics and environmental sustainability in Latin American nations remains insufficiently explored, particularly regarding how economic growth and unemployment influence green development initiatives. This study investigates these relationships using an integrated analytical framework. Drawing on data from 28 Latin American countries spanning 2005–2022, our analysis employs two-way fixed-effects, mediated-effects, and moderated-effects models to reveal several key insights. The results demonstrate that economic growth substantially promotes green development through enhanced technological innovation, whereas rising unemployment impedes environmental progress by undermining social stability. Notably, entrepreneurial activity amplifies the positive impact of economic growth on green development and mitigates the adverse effects of unemployment. The study further reveals asymmetric effects: economic growth exhibits stronger positive influences in economically advanced nations, while unemployment poses more significant barriers to green development in less developed economies. These findings contribute to understanding how socioeconomic factors shape environmental outcomes in developing regions and offer valuable insights for policymakers seeking to balance economic prosperity with environmental sustainability.