Blended finance and climate outcomes: An empirical study of emerging economies

This study examines how climate public–private partnerships (PPPs) utilizing blended finance shape renewable energy development in emerging economies. To assess this relationship, this study constructs a harmonized country–year panel dataset integrating project-level infrastructure investments (from the World Bank) with national renewable capacity (from the International Renewable Energy Agency) and electricity generation mix data (from Our World in Data). Using a country fixed-effects framework with temporal lags (N = 507), the empirical results indicate a statistically significant positive association between lagged blended finance and subsequent capacity growth. Furthermore, a negative interaction with lagged capacity suggests declining marginal effects as countries accumulate capacity. This suggests that blended finance may play a more pronounced catalytic role in early-stage systems while becoming supplementary as markets mature. Heterogeneity analysis shows that statistically significant associations are concentrated in lower-middle- and upper-middle-income countries, suggesting that foundational structural and institutional readiness serves as a key enabler for effective capital mobilization. In addition, long-term share analysis provides evidence that shifting the energy mix requires extended time horizons, given that short-term impacts are not statistically significant. To illustrate these dynamics, this study presents case studies of Thailand and Laos. Whereas Laos recorded notable increases through large blended-finance-backed hydropower projects supported by technical assistance and guarantees, Thailand’s more advanced system exhibited steadier incremental growth. Ultimately, this study contributes to the literature by conceptualizing blended finance as a phase-dependent bridge mechanism rather than a uniform solution, suggesting its potential to mobilize capital to advance the long-term energy transition.