Green finance and sustainable financial development in Latin America

Abstract

– The transition to low-carbon economies has made green finance an essential element of current financial development, especially in emerging countries that are highly dependent on natural resources and vulnerable to climate change. However, the quantitative literature for Latin America has significant gaps regarding the links between green growth indicators, sustainable financial development, and aggregate macroeconomic performance. This research analyzes the relationships between these dimensions in Chile, Colombia, Costa Rica, and Mexico in the period 2010-2022, using a quantitative panel design with secondary data extracted from the OECD Green Growth Indicators Database. The analysis combines Pearson correlations, time series linear regression, and comparison of sub-periods before and after the pandemic. The results show a structural paradox: there is consistency between environmental productivity indicators, but there is a statistically significant dissociation between productive efficiency and green technological innovation. National paths are divergent, there is no regional convergence, and Latin American participation in green patents is declining. The global pandemic induced peaks in environmental productivity without altering innovation trajectories, showing that temporary disruptions are not sufficient to change structural constraints. The study provides an empirical evidence-based typology that distinguishes between green growth trajectories according to productivity, innovation, and emissions intensity arrangements, helping to explain territorial heterogeneities in sustainable finance in Latin America.