Scaling Up Green Investment in the Global South: Strengthening Domestic Financial Resource Mobilisation and Attracting Patient International Capital

Principal Investigator

• Professor Ulrich Volz

Funder

• GIZ on behalf of the German Federal Ministry for Economic Cooperation and Development

Duration

• 2022-2024

The research project will provide evidence-based analysis that will help to design policies that will support the scaling up of sustainable investment in the Global South.

Specifically, the research project seeks to address two central questions:

• What needs to be done to strengthen domestic financial resource mobilisation for scaling up local climate-friendly, sustainable investments and reducing capital exports from developed to advanced economies?
• What needs to happen to attract more long-term, patient capital from abroad for the financing of Nationally Determined Contributions and low-carbon, climate-resilient and nature-positive development strategies?

The research findings will inform policy recommendations for scaling up low-carbon, climate-resilient and nature-positive investment in developing countries. Policy options for strengthening domestic resource mobilisation that will be considered include, among others, the development of green/sustainable finance and investment frameworks; measures to foster the development of local currency green bond markets; developing or strengthening national development banks; the use of digital finance approaches to raise domestic funds for sustainable, in particular green, investments; and the development of instruments such as diaspora bonds to attract remittances and channel them into sustainable, climate-friendly and climate-resilient investments.

The policy recommendations will provide concrete examples of how to implement such policies and measures. The project will also develop recommendations for innovative financing instruments and approaches that could be explored by development cooperation entities.