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Political economy of international climate finance: Navigating decisions in PPCR and SREP

This working paper explores how countries can enhance their ‘climate finance readiness’ by understanding their internal political economy. Studies in three countries reveal how actors’ various ideas and incentives influence their choices and decisions on climate finance projects. Understanding how these factors interact — understanding the political economy — can help policymakers manage expectations and stakeholder risks early on, prioritise equitable climate finance investments and fashion a consensus from divergent ideas.

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IIED is examining the ideas, resources and power dynamics that shape how the Climate Investment Funds achieve development impacts. Together, these factors make up the political economy, and examining them will help governments and development organisations understand how the climate investment funds can best bring about the transformational change the funds aim for.

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Understanding the political economy of the Climate Investment Funds

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