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

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  • Li, Dmitriy D.
  • Rishi, Meenakshi
  • Bae, Jeong Hwan

Abstract

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.

Suggested Citation

  • Li, Dmitriy D. & Rishi, Meenakshi & Bae, Jeong Hwan, 2021. "Green official development Aid and carbon emissions: do institutions matter?," Environment and Development Economics, Cambridge University Press, vol. 26(1), pages 88-107, February.
    • Handle: RePEc:cup:endeec:v:26:y:2021:i:1:p:88-107_5
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    Cited by:

    1. Kadir Aden & Sadik Aden Dirir, 2023. "Evaluating The Ad-Hoc Impact Of Fiscal Policy And Governance Quality In Attracting The Official Development Assistance: A Testimonial From East African Countries," Green, Blue & Digital Economy Journal, Publishing house "Baltija Publishing", vol. 4(1).
    2. Kadir Aden & Sadik Aden Dirir, 2023. "Evaluating The Ad-Hoc Impact Of Fiscal Policy And Governance Quality In Attracting The Official Development Assistance: A Testimonial From East African Countries," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 4(1).
    3. Heri Bezić & Davor Mance & Davorin Balaž, 2022. "Panel Evidence from EU Countries on CO 2 Emission Indicators during the Fourth Industrial Revolution," Sustainability, MDPI, vol. 14(19), pages 1-25, October.
    4. Haider Mahmood & Shafiqul Hassan & Muhammad Tanveer & Abdul-Rahim Ahmad, 2022. "The Effects of Rule of Law, Regulatory Quality, and Renewable Energy on CO2 Emissions in South Asia," International Journal of Energy Economics and Policy, Econjournals, vol. 12(6), pages 16-21, November.

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