Repercussions of Sustainable Agricultural Productivity, Foreign Direct Investment, Renewable Energy, and Environmental Decay: Recent Evidence from Latin America and the Caribbean

Abstract

This research aimed to assess and implement the long- and short-run relationship of agriculture and environmental sustainability with control variables. Purposely, this research consolidated theoretical and conceptual principles to create a systematic structure in agriculture for the development of both sectors, i.e., agricultural and the environment. On this ground statement, this research was motivated to contemplate the relationship between carbon dioxide emission, agricultural production, gross domestic product, renewable energy consumption, and foreign direct investment using annual data series of Latin American and Caribbean countries from 1971 to 2018. Autoregressive distributed lag (ARDL) was used as an econometric methodology to examine the relationship among the variables. Agriculture is the most vulnerable sector in Latin American and Caribbean countries, and the economy is heavily dependent on it. The main results of this research indicated that agriculture and CO2 emissions were positively related to each other for the long and short run, which means that agricultural activities increased the CO2 emission levels. At the same time, the control variables showed mixed associations with environmental degradation as gross domestic product (GDP) was positively significant and renewable energy consumption was negatively significant. The error correction (ECt−1) term was negatively significant, confirming the long-run relationship and the speed of adjustment from short- to long-run equilibrium. Agricultural production and GDP led to increments in CO2 emissions, while renewable energy consumption negatively contributed to toxic emissions. The speed of adjustment in Latin American and Caribbean countries was nippy. It required 2.933 periods for the transformation from the short periodic phase to the long term. A comprehensive approach is the research debate rigorously and holistically based on divergent sectors of an economy and their relationship with environmental sustainability. The econometric method, symbolic system, and conceptual existence were designed originally.