{
  "title": "Climate Policies as a Catalyst for Green FDI",
  "publication": "IMF Working Papers, March 1, 2024",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2024/03/01/climate-policies-as-a-catalyst-for-green-fdi-545450",
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  "summary": "This paper assesses the role of climate policies as a catalyst of low carbon technologies deployment through foreign direct investment (FDI).",
  "sections": [
    {
      "heading": "Summary and research question",
      "content": "- Assesses the role of climate policies as a catalyst of low carbon technologies deployment through foreign direct investment (FDI).\n- Leverages detailed cross-border project-level information to identify “green” FDI.\n- Core finding: a higher number of active climate policies is associated with higher levels of green FDI inflows."
    },
    {
      "heading": "Key empirical findings",
      "content": "- A higher number of active climate policies in a recipient country is associated with higher levels of green FDI inflows.\n- Climate policies do not appear to be linked to lower levels of non-green projects, suggesting relatively small overall costs from the green transition.\n- Heterogeneity across sectors and instruments:\n  - The association between climate policies and green projects is particularly strong in energy and manufacturing.\n  - Stronger effects when the recipient's climate portfolio is tilted towards binding policies (e.g., taxes and regulation) and expenditure measures.\n- Policy spillovers:\n  - Larger climate policy portfolios in the source country are linked to higher green FDI outflows.\n  - Green subsidies in source countries can discourage green FDI outflows, implying subsidies could hamper efforts to deploy low-carbon technologies across countries."
    },
    {
      "heading": "Policy implications and interpretation",
      "content": "- Expanding the number of active climate policies can attract green FDI without reducing non-green projects, indicating limited short-term trade-offs.\n- Binding policies (taxes, regulation) and expenditure measures in recipient countries are particularly effective at catalyzing green FDI in energy and manufacturing.\n- Source-country policy design matters for international deployment of low-carbon technologies:\n  - Broad, binding climate policy portfolios in source countries can promote green FDI outflows.\n  - Green subsidies may have unintended cross-border effects by discouraging green FDI outflows and thus potentially limiting international diffusion of low-carbon technologies."
    },
    {
      "heading": "Keywords and thematic scope",
      "content": "- Balance of payments; Climate change; Climate policy; Environment; Foreign direct investment; Greenhouse gas emissions; Tariffs; Taxes.\n- Keywords: Climate change, Climate policies, Climate policy, FDI, FDI inflow, FDI outflow, Foreign direct investment, Global, green FDI, Greenhouse gas emissions, low carbon technologies, policy instrument, policy spillover, renewable energy, Tariffs.\n\nSource: Climate Policies as a Catalyst for Green FDI — Samuel Pienknagura, March 1, 2024.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2024/03/01/climate-policies-as-a-catalyst-for-green-fdi-545450"
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    "Authors: Samuel Pienknagura",
    "Published: March 1, 2024",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400269448.001",
    "Assesses the role of climate policies as a catalyst of low carbon technologies deployment through foreign direct investment (FDI).",
    "Leverages detailed cross-border project-level information to identify “green” FDI.",
    "Core finding: a higher number of active climate policies is associated with higher levels of green FDI inflows.",
    "A higher number of active climate policies in a recipient country is associated with higher levels of green FDI inflows.",
    "Climate policies do not appear to be linked to lower levels of non-green projects, suggesting relatively small overall costs from the green transition.",
    "Heterogeneity across sectors and instruments:",
    "Policy spillovers:",
    "Expanding the number of active climate policies can attract green FDI without reducing non-green projects, indicating limited short-term trade-offs.",
    "Binding policies (taxes, regulation) and expenditure measures in recipient countries are particularly effective at catalyzing green FDI in energy and manufacturing.",
    "Source-country policy design matters for international deployment of low-carbon technologies:",
    "Balance of payments; Climate change; Climate policy; Environment; Foreign direct investment; Greenhouse gas emissions; Tariffs; Taxes.",
    "Keywords: Climate change, Climate policies, Climate policy, FDI, FDI inflow, FDI outflow, Foreign direct investment, Global, green FDI, Greenhouse gas emissions, low carbon technologies, policy instrument, policy spillover, renewable energy, Tariffs.",
    "**Working Paper**"
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