Influence of economic globalisation on growth and environmental quality in Pacific Alliance countries

Abstract

This article examines the dual impact of economic globalisation on economic growth and environmental quality within the Pacific Alliance—Chile, Colombia, Mexico and Peru—between 1990 and 2022. Employing a quantitative longitudinal approach, it applies panel data econometric techniques, specifically Fixed Effects models, complemented by robustness checks using Random Effects and Pooled Ordinary Least Squares estimations. Panel unit root tests (Levin–Lin–Chu; Im–Pesaran–Shin) confirmed data stationarity, and the Hausman test validated the suitability of the Fixed Effects estimator. The results show that trade openness exerts a positive and statistically significant effect on real economic growth, suggesting that deeper integration into global markets enhances productive efficiency, diversifies exports and improves resource allocation. By contrast, foreign direct investment does not exhibit a significant relationship with growth, owing to institutional weakness, limited infrastructure and the shallow financial systems that characterise the region. Regarding environmental outcomes, trade openness increases carbon dioxide emissions, indicating that liberalisation stimulates production while exacerbating environmental degradation in contexts with insufficient regulatory capacity. Foreign direct investment likewise shows no significant effects, possibly due to sectoral heterogeneity. The study concludes that the Pacific Alliance must strengthen environmental governance and guide trade and investment towards sustainable development.