TY - JOUR
T1 - Effects of foreign finance measures on the decoupling of greenhouse gas emissions from economic development
T2 - a panel study of 97 developing countries over the period 2000–2018
AU - Ryu, Sohyeon
AU - Lee, Taedong
N1 - Publisher Copyright:
© 2023 Informa UK Limited, trading as Taylor & Francis Group.
PY - 2024
Y1 - 2024
N2 - Greenhouse gas (GHG) emissions from human activities are the principal cause of accelerated global climate change and climate risk. A country faces a coupling of GHG emissions in proportion to increases in the gross domestic product (GDP) in the initial stage of its economic development. In the later period of economic development, the decoupling of GHGs from GDP can be achieved by efficient technology and environmental awareness. What makes some developing countries achieve decoupling? This study analyses the effects of three financial measures–foreign direct investment (FDI), climate change aid and the Clean Development Mechanism (CDM)–which influence both GDP and GHGs in developing countries. For the empirical analysis, this study utilizes a panel regression using data from 97 countries between 2000 and 2018. The results suggest that the effectiveness of reducing GHG emissions and decoupling differ among the three previously mentioned financial measures. Climate change aid induces decoupling while coupling follows the CDM. FDI lacks statistical significance. A proportion of renewable energy from the total electricity is associated with strong decoupling. Well-designed climate finance measures that consider developing countries’ socio-economic conditions and renewable energy adoption can induce GHG mitigation as well as economic growth.
AB - Greenhouse gas (GHG) emissions from human activities are the principal cause of accelerated global climate change and climate risk. A country faces a coupling of GHG emissions in proportion to increases in the gross domestic product (GDP) in the initial stage of its economic development. In the later period of economic development, the decoupling of GHGs from GDP can be achieved by efficient technology and environmental awareness. What makes some developing countries achieve decoupling? This study analyses the effects of three financial measures–foreign direct investment (FDI), climate change aid and the Clean Development Mechanism (CDM)–which influence both GDP and GHGs in developing countries. For the empirical analysis, this study utilizes a panel regression using data from 97 countries between 2000 and 2018. The results suggest that the effectiveness of reducing GHG emissions and decoupling differ among the three previously mentioned financial measures. Climate change aid induces decoupling while coupling follows the CDM. FDI lacks statistical significance. A proportion of renewable energy from the total electricity is associated with strong decoupling. Well-designed climate finance measures that consider developing countries’ socio-economic conditions and renewable energy adoption can induce GHG mitigation as well as economic growth.
KW - Clean Development Mechanism (CDM)
KW - Decoupling of greenhouse gas emissions from economic development
KW - climate change aid
KW - developing countries
KW - foreign direct investment (FDI)
KW - renewable energy
UR - http://www.scopus.com/inward/record.url?scp=85177604385&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85177604385&partnerID=8YFLogxK
U2 - 10.1080/17565529.2023.2273488
DO - 10.1080/17565529.2023.2273488
M3 - Article
AN - SCOPUS:85177604385
SN - 1756-5529
VL - 16
SP - 588
EP - 599
JO - Climate and Development
JF - Climate and Development
IS - 7
ER -