Factors determining the emergence of environmental concerns regarding Chinese investment in the South America's extractive industries

Abstract

This article focuses on analyzing environmental governance in the context of the growing economic relations between China and Latin America, with particular attention to Chinese Foreign Direct Investment (FDI) in the South American extractive industries. Using novel data that match Chinese investment and local environmental reactions, the results strongly support a positive correlation between institutional capacity for environmental protection in recipient countries and an increase in local environmental concerns. I find that the escalation of activity by Chinese companies with greater state participation in the extractive industries raises the probability of generating environmental concerns in affected communities. These findings significantly contribute to understanding the complex interactions between Chinese investments and environmental governance, providing an essential foundation for addressing environmental challenges associated with Chinese FDI in Latin America.