Foreign Direct Investment and human development in Colombia: the case of energy mining sector (1990–2021)

The main purpose of this research was to analyze the relationship between total Foreign Direct Investment (FDI) and the mining and energy sector in human development in Colombia from 1990 to 2021, through the estimation of two Autoregressive Vectors -VAR- that accounted for the causal relationship of the variables. The first vector took into account the total FDI, while the second one dealt with the FDI of the mining and energy sector, which from 2003 to 2010 represented, on average, 55% of the total FDI, with the peak year being 2010, when it reached 76% of it. Also, two Error Correction Vectors -EVC- were estimated as a robustness test that confirmed the results obtained. In the two estimations, the Human Development Index (HDI), Foreign Direct Investment (FDI) and the Real Exchange Rate Index (RERI) were taken into account as endogenous variables, while WTI reference oil prices at 2015 prices were considered exogenous. A result, the HDI caused total FDI, in the Granger sense, while for mining and energy FDI had not significance. Thus, an increase of 1% in HDI generated a rise of 10.15% in total FDI inflow.