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The Political Economy of Development and Climate Policy - Prospects and Challenges for an Emission Trading Scheme as Development and Climate Policy Tool


  • Andreas Freytag

    (Friedrich Schiller University Jena, University of Stellenbosch, CESifo-Research Network, STIAS)

  • Matthias Menter

    (Friedrich Schiller University Jena)

  • Jan Hauke Montag

    (Friedrich Schiller University Jena)

  • Sebastian Schuhmann

    (Friedrich Schiller University Jena)


Economic development and climate change constitute two of today’s major international policy challenges. While development cooperation has long been on the political agenda, addressing global climate change has gained policymakers’ attention more recently. Transfers for financing single projects have been a common practice in the development field. Empirical evidence suggests that the effectiveness has remained disappointing. Consequently, many developing countries face governance problems affecting their ability to master challenges associated with climate change. Current trends in international climate cooperation follow a similar approach. Political efforts may prove insufficient to meet climate objectives if similar deficiencies occur in climate cooperation. Applying a political economy approach, this paper provides a critical assessment of current practices in international development and climate policies highlighting the observed deficiencies in development and potential implications for climate cooperation. Acknowledging the interlinkages and linking development and climate change policies, could increase the effectiveness and efficiency of political efforts. The paper, furthermore, discusses market-based instruments, especially Emission Trading Schemes as policy alternatives as well as the potential merits for circumventing and solving institutional problems experienced in climate cooperation. We discuss the political economic challenges affecting the implementation and operation of (a global) scheme.

Suggested Citation

  • Andreas Freytag & Matthias Menter & Jan Hauke Montag & Sebastian Schuhmann, 2023. "The Political Economy of Development and Climate Policy - Prospects and Challenges for an Emission Trading Scheme as Development and Climate Policy Tool," Jena Economics Research Papers 2023-019, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2023-019

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    References listed on IDEAS

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    More about this item


    development; climate change; policy coordination; emission trading scheme; issue linkage;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • P41 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Planning, Coordination, and Reform
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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