Is renewable energy ODA enough to significantly increase renewable electricity generation in developing countries?

Abstract

This study examines whether the effectiveness of RE ODA (Renewable energy official development assistance) depends on a developing country’s absorptive capacity – which are the implementation of RE financial incentives policy and level of democracy – during 2000-2014 in 98 developing countries. The estimation result shows that when a developing country is democratic and has implemented RE financial incentive policy, the impact of RE ODA on RE generation is significantly positive at the 5 % level. This study is important as it specifically delineates the interaction effect of absorptive capacity and RE ODA, which has not been discussed before. Previous studies have discussed mainly about the effectiveness of ODA that is given to all sectors and analyzed the impact of all-sector ODA on economic growth. Thus, this research would add new insights into a field of study on ODA effectiveness, as it focuses on the context of renewable electricity generation.