Does energy‐related aid affect emissions? Evidence from a global dataset

Donor countries have been using international aid in the field of energy for at least three decades. The stated objective of this policy is to reduce emissions and promote sustainable development in the global South. In spite of the widespread use of this policy tool, very little is known about its...

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Bibliographic Details
Published in:Review of development economics 2018-08, Vol.22 (3), p.1166-1194
Main Authors: Bhattacharyya, Sambit, Intartaglia, Maurizio, McKay, Andy
Format: Article
Language:English
Subjects:
Carbon dioxide
Economic models
Emissions
Energy‐Related Aid
Kuznets curve
Sustainable development
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Summary:Donor countries have been using international aid in the field of energy for at least three decades. The stated objective of this policy is to reduce emissions and promote sustainable development in the global South. In spite of the widespread use of this policy tool, very little is known about its effect on emissions. In this paper we perform an empirical audit of the effectiveness of energy‐related aid in tackling CO2 and SO2 emissions. Using a global panel dataset covering 128 countries over the period 1971–2011 and estimating a parsimonious model using the Anderson and Hsiao estimator, we do not find any evidence of a systematic effect of energy‐related aid on emissions. We also find that the non‐effect is not conditional on institutional quality or level of income. Countries located in Europe and Central Asia do better than others in utilizing this aid to reduce CO2 emissions. Our results are robust after controlling for the environmental Kuznets curve, country fixed effects, country‐specific trends, and time‐varying common shocks.
ISSN:1363-6669
1467-9361
DOI:10.1111/rode.12409