The Future of Development Aid in a Globalizing World with Climate Change

Michael Hübler

Hannover Economic Papers (HEP) from Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät

Abstract: This essay reviews the state of knowledge about the connection of climate change and development aid in a globalizing world and makes three contributions. First, it opts for an integrated treatment of short-term aid, striving for the urgent fulfillment of basic human needs, and long-term aid, striving for economic development and self-dependence. Against the background of environmental degradation and climate change, it opts for an integrated treatment of the human-society-economy dimension and the biodiversity-nature-earth dimension as well. Second, it proposes a "global insurance for survival", for which everybody on earth is eligible. Besides, it advocates the creation of a direct link between foreign aid and foreign direct investment, associated with international technology diffusion. Economic activities should be backed up by a global legal system focusing on labor, the environment and innovation. Within this system, everybody should be able to claim against firms at an international court. The legal system relaxes intellectual property rights of life-essential and environmentally friendly products in order to enhance technology diffusion. Third, this essay suggests to finance the integrated system of development aid via a globally unified tax imposed on all people and firms on earth above a threshold income level. As a central novel element, the allocation of aid project funding occurs on a market base with the help of a certificate trading system. This mechanism achieves efficiency and flexibility across the aid dimensions identified in the first step.

Keywords: foreign aid; foreign direct investment; absorptive capacity; certificate trading (search for similar items in EconPapers)
JEL-codes: F23 F35 F63 H23 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2014-12
New Economics Papers: this item is included in nep-ene, nep-env and nep-pke
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