Green official development Aid and carbon emissions: do institutions matter?

This paper examines whether green Official Development Aid (ODA) has a significant role in mitigating carbon emissions in recipient countries, and if institutional quality matters for the effectiveness of green ODA. For 86 green ODA recipient countries over the period 2003–2014, we explore the nexus...

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Bibliographic Details
Published in:Environment and development economics 2021-02, Vol.26 (1), p.88-107
Main Authors: Li, Dmitriy D., Rishi, Meenakshi, Bae, Jeong Hwan
Format: Article
Language:English
Subjects:
Carbon
Clean technology
Climate change
Corruption
Developing countries
Development aid
Economic development
Efficiency
Emissions
Energy
Environmental impact
Environmental policy
Environmental regulations
Foreign aid
Freedoms
Greenhouse effect
Industrialized nations
Institutions
International organizations
LDCs
Liberalization
Regulation
Rule of law
Sustainable development
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Summary:This paper examines whether green Official Development Aid (ODA) has a significant role in mitigating carbon emissions in recipient countries, and if institutional quality matters for the effectiveness of green ODA. For 86 green ODA recipient countries over the period 2003–2014, we explore the nexus between green ODA, institutions and carbon emissions. By using a two-step system generalized method of moment (GMM), we find that green ODA overall has no direct association with the mitigation of carbon emissions. However, when institutional quality indices are included, we found a significant effect of institutional quality on the effectiveness of green ODA. In general, green ODA is associated with higher carbon emissions in countries with poor institutions. In particular, green ODA is effective in mitigating carbon emissions when channeled to countries that enjoy higher economic freedom as well as more freedom from corruption. Results are mixed for the rule of law.
ISSN:1355-770X
1469-4395
DOI:10.1017/S1355770X20000170