Environmental Health and Sustainability in South America: Assessing the Impacts of Foreign Direct Investment and Energy Choices Through the N‐Shaped EKC and Pollution Haven Lens

This study examines the impact of GDP, FDI, and various energy choices, including REN, FOS, and NUE, on CO2 emissions in South American regions from 1990 to 2023. Using Driscoll–Kraay Standard Errors (DKSE), alongside feasible generalized least squares (FGLS) and panel‐corrected standard errors (PCSE) for robustness checks, the study offers significant empirical insights. The results diverge from the conventional EKC, revealing an inverted N‐shaped EKC hypothesis. GDP is negatively linked with CO2 emissions, while GDP2 and GDP3 show positive coefficients, highlighting the role of economic expansion in improving ecological quality. However, in the early phase, foreign direct inflows reduce CO2 emissions. Still, later both FDI2 and FDI3 show positive associations with CO2 emissions, indicating the partial coexistence of PHH hypothesis effects and an overall J‐shaped relationship depending on the stage of FDI. In addition, the use of fossil fuels and nuclear energy significantly increases CO2 emissions, whereas the consumption of renewable energy demonstrates a mitigating effect. These outcomes underscore the crucial need for sustainable economic policies, the adoption of clean energy, and environmentally conscious foreign direct investment strategies to ensure long‐term ecological resilience in South America.