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

ABSTRACT This study examines the impact of GDP, FDI, and various energy choices, including REN, FOS, and NUE, on CO 2 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 CO 2 emissions, while GDP 2 and GDP 3 show positive coefficients, highlighting the role of economic expansion in improving ecological quality. However, in the early phase, foreign direct inflows reduce CO 2 emissions. Still, later both FDI 2 and FDI 3 show positive associations with CO 2 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 CO 2 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.