IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v149y2025ics0140988325005535.html
   My bibliography  Save this article

Importing innovation or indigenous innovation: Evaluating the effect of climate finance on promoting environmental sustainability in developing countries

Author

Listed:
  • Zhang, Jinhua
  • Li, Yafei
  • Du, Ruonan
  • Hua, Xiuping

Abstract

This paper examines the influence of climate finance on the CO2 emissions and explores the underlying mechanisms from the perspectives of external and indigenous innovations, with a cross-country panel dataset encompassing 140 developing countries from 2002 to 2022. The results indicate that climate finance has a negative and significant impact on CO2 emissions. Specifically, a one-standard-deviation increase in climate funds correlates with an approximate 3.31 % reduction in per GDP CO2 emissions. However, heterogeneity analysis reveals that in the least developed countries, climate finance does not significantly reduce carbon emissions and, in some cases, may even enhance the carbon emissions. Mechanism analysis suggests that climate finance promotes environmental sustainability by introducing external innovation rather than promoting indigenous innovation in developing countries. These results shed new light on the pollution halo hypothesis in developing nations.

Suggested Citation

  • Zhang, Jinhua & Li, Yafei & Du, Ruonan & Hua, Xiuping, 2025. "Importing innovation or indigenous innovation: Evaluating the effect of climate finance on promoting environmental sustainability in developing countries," Energy Economics, Elsevier, vol. 149(C).
    • Handle: RePEc:eee:eneeco:v:149:y:2025:i:c:s0140988325005535
    DOI: 10.1016/j.eneco.2025.108726
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988325005535
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2025.108726?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:149:y:2025:i:c:s0140988325005535. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.