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Economic Impact of International Carbon Markets on Developing Nations

Year: 2025

Type: article

Abstract: This study investigates the economic impact of international carbon markets, specifically the Emissions Trading System (ETS) and the Clean Development Mechanism (CDM), on developing nations. Utilizing a panel data approach, data from 50 developing countries spanning 2000 to 2022 is analyzed to assess how participation in these markets influences economic development. The findings indicate a positive relationship between carbon market revenue and GDP growth, highlighting the potential of these markets to fund infrastructure and renewable energy investments. However, the study reveals that the benefits of technology transfer remain statistically insignificant, suggesting the need for improved integration of technology transfer mechanisms within carbon market frameworks. While the study underscores the promise of carbon markets in stimulating economic growth, it also identifies challenges related to institutional capacity and revenue distribution. Recommendations include enhancing institutional capacities, promoting effective technology transfer, and prioritizing renewable energy investments. These insights contribute to the understanding of how carbon markets can serve as a tool for sustainable development in developing countries.

Source: Zenodo (CERN European Organization for Nuclear Research)

DOI: 10.5281/zenodo.15817563

Authors: Saka, Fatai Adio, Jamiu, Yusuf Adeniyi, Araoye, Sikiru Okunlade, Olajide, Afolabi Lukman

Institutions: Akanu Ibiam, Federal Polytechnic Unwana, Fountain University, Summit University, Offa

Language: English

Topic: Climate Change Policy and Economics

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Industry, innovation and infrastructure, Climate action, Partnerships for the goals, Decent work and economic growth

Open Access status: green

OpenAlex ID: W6930851636

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