CLIMATE FINANCE IN THE GLOBAL SOUTH: A COMPARATIVE ANALYSIS OF VULNERABILITY AND RESILIENCE IN PAKISTAN AND BANGLADESH

Abstract

Climate change poses unprecedented challenges to developing economies, with South Asian nations facing acute vulnerabilities due to geographical exposure, structural constraints, and institutional limitations. This paper examines the relationship between climate finance mobilization, institutional quality, and climate resilience in Pakistan and Bangladesh during 2000-2023. Drawing on institutional economics and climate vulnerability frameworks, the analysis investigates how governance structures, financial market development, and adaptive capacity mediate climate finance effectiveness in building resilience. Using panel data analysis and comparative institutional assessment, the study reveals that institutional quality significantly moderates the relationship between climate finance inflows and resilience outcomes, measured through disaster preparedness, agricultural adaptation, and infrastructure climate-proofing. Bangladesh demonstrates stronger institutional mechanisms for climate finance absorption despite lower overall governance indicators, attributed to specialized climate governance institutions and community-based adaptation frameworks. Pakistan exhibits higher climate finance volatility and weaker translation of funds into measurable resilience gains, reflecting institutional fragmentation and coordination challenges. The findings indicate threshold effects wherein climate finance effectiveness increases substantially above minimum institutional quality levels. Policy implications emphasize institutional capacity building in climate finance governance, strengthening monitoring and evaluation frameworks, and developing regional cooperation mechanisms for climate resilience financing. This research contributes to climate economics by providing empirical evidence on institutional determinants of climate finance effectiveness in vulnerable developing economies.