International climate aid and trade

Foreign aid allocation by donor countries to developing economies is known be motivated the country’s bilateral trade interests. Does this apply also climate aid? In paper, we combine theoretical and empirical analyses investigate how affects countries’ allocations of aid. Our analysis develops a simple model support our hypothesis that has positive impact on transfers. The highlights terms-of-trade income effects aid, predicts relationship between exports imports from recipient their based data for 2002 2017. We employ fixed instrumental variable-2 stage least square estimations (IV-2SLS) with shift-share instrument overcome endogeneity trade. results show donors’ have significant, robust, effect