The tensions of the "green transition" for South American economies

This chapter explores the tensions that a transition towards a zero-carbon economy entails for South American countries. Even if their contribution to global greenhouse gas emissions is low (while their share of global gross development product is 4.5 percent, their share of global emissions is 3 percent) their reliance on natural resource-intensive activities entails a series of risks. Given their current productive structure, the attempt to increase prosperity, including in environmental sustainability, would most likely reduce their external sustainability as it would require a reduction in exports. On the other hand, an attempt to preserve external sustainability so that the economy can finance all the investments that increasing prosperity requires would need the sustained exploitation of natural resources, implying in turn the demise of the environmental sustainability goal. Finally, the choice of a trajectory characterized by both external and environmental sustainability would, under the given productive structure and the laggard human development indicators, imply the forgoing of the prosperity goal, as the generalized increase of well-being would require, in principle, a sustained process of growth in the production of goods and services. In this chapter we attempt to explore the trajectories that South American economies have gone through over the last 30 years in terms of prosperity, external and environmental sustainability to find out if there are signs indicating the likelihood of a “green transition” or if South American economies are once again deemed to lag behind developed countries.