GREEN FINANCE AS A CHANNEL FOR ATTRACTING INTERNATIONAL CAPITAL TO EMERGING ECONOMIES

This paper examines green finance as a channel for attracting international capital to emerging economies facing a large climate-finance gap — estimated at about USD 2.4 trillion per year by 2030 for emerging and developing economies excluding China. It reviews the instruments of the channel (thematic bonds, green loans, multilateral development bank climate finance, blended finance, and ESG funds), the scale and dynamics of the global and emerging-market markets (global labeled sustainable-bond issuance reached about USD 1.1 trillion in 2024, with emerging-market green-bond issuance rising 34% to USD 135 billion in 2023), and the mechanisms through which green labeling mobilizes foreign capital: investor demand, credibility and signaling, de-risking, and demonstration effects. The case of Uzbekistan — three thematic bonds totaling about USD 1.07 billion and more than USD 18.5 billion of multilateral finance over 2020–2024 — illustrates the channel in operation. The paper concludes that green finance is the principal but not sufficient channel for closing the gap, and that its effectiveness depends on national taxonomies, de-risking instruments, and the development of local-currency markets.