Do Globalization and Clean Energy Transitions Advance Sustainable Development? Evidence on CO 2 Emissions From Costa Rica

Abstract

Costa Rica, an emerging economy with a high reliance on renewable energy, continues to face carbon emission pressures linked to globalization, foreign investment, and economic growth. This study examines the long‐run effects of globalization, foreign direct investment, access to clean fuels and technologies for cooking, renewable energy consumption, and economic growth on CO 2 emissions in Costa Rica. Although the country is widely recognized for its renewable energy leadership and environmental commitment, the combined role of globalization and investment in shaping emission outcomes remains underexplored. Using annual data from 1980 to 2023, the study employs dynamic ordinary least squares (DOLS), fully modified ordinary least squares (FMOLS), and canonical cointegrating regression (CCR) to ensure robust long‐run estimation. The results indicate that globalization, clean fuel access, renewable energy consumption, and economic growth significantly reduce CO 2 emissions, supporting the effectiveness of energy transition and structural openness in improving environmental quality. In contrast, FDI increases emissions, suggesting the persistence of pollution‐intensive investment. These findings emphasize the need to reorient foreign investment toward greener activities. The study offers policy‐relevant insights to support Costa Rica's decarbonization agenda and progress toward the Sustainable Development Goals (SDGs).