Abstract

While foreign aid explicitly targets poverty-related development outcomes, climate finance does not. This raises a central question: does climate finance generate broader development outcomes as an externality? The assumption of positive development outcomes has justified billions of US dollars of financing, and there has been little evaluation of the impact of climate finance in this context. Using data from Fan, Wang, Zhong, Dong, and An (2025), I find that climate finance is associated with modest gains in private capital formation, a small increase in employment, and heterogeneous effects across labor force participation in addition to no observed relationship with health. These results are reflective in the estimated effect on GDP per capita growth and poverty measures. They also further suggest that climate finance may more greatly benefit countries vulnerable to climate change, but gender equity should be considered in its disbursement.

Advisor

Nevatia, Vedanshi

Department

Economics

Disciplines

Economics | Growth and Development | Macroeconomics

Publication Date

2026

Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis

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