Climate Finance as a Driver of Technological and Economic Progress
By Luan Gloria (CFC-GS/UFPA) Climate change is driving a crucial debate on how to reconcile maintaining actively productive and constantly growing economies with environmental preservation, outlining a new global productive structure. From the perspective of economic growth theory, authors such as Solow and Romer offer different views on how sustained economic growth can be achieved. Solow argues that growth originates from exogenous factors, such as interaction and technology transfer between economies. Romer, on the other hand, argues that growth is driven by internal factors, essentially by promoting research and development (R&D). Solow’s model, applied to climate finance, can view sustainability as the preservation and modernization of national capital. Climate change accelerates capital depreciation (destruction by disasters and obsolescence of polluting technology), reducing growth potential. Climate finance is the mechanism to reverse this loss, migrating from “polluting capital” to “green capital.” By stimulating technical progress (Solow residual) with low-carbon innovations, it allows for a new steady state of greater productivity and well-being, overcoming environmental limits and the physical destruction of global warming. In Romer’s endogenous growth model, technological progress is the result of deliberate economic decisions, especially investments in research and development (R&D) that generate new ideas, which are non-rivalrous and produce positive externalities. Climate finance fits directly into this framework by expanding resources and incentives for green innovation, reducing risks, and increasing the expected return on clean technologies. In this way, climate policies are no longer neutral with respect to growth and permanently influence the long-term growth rate. In addition, green innovation faces a double market failure: the first is the knowledge externality, typical of Romer’s model, and the second is the environmental externality associated with carbon emissions. Climate finance acts as a mechanism to correct these failures by directing human and financial capital to clean R&D, generating technological spillovers and reducing future mitigation costs. Thus, in light of Romer’s model, climate finance not only enables the transition to a low-carbon economy, but also sustains a pattern of economic growth compatible with environmental sustainability. Patent registration is recognized as an incomplete metric for assessing a country’s technological advancement. Patent counts include filings by residents and non-residents. This distinction exists because, when seeking legal protection for their inventions, filers can inflate a nation’s registration numbers. However, a high volume of registrations does not always reflect intrinsic and effective technological development in the society in question, as illustrated in the figure below. Figure 1: Distribution of patent registrations in countries in 2024. Source: World Intellectual Property Organization (2024). China, driven by its socioeconomic approach and growing global technological relevance, stands out as the country with the highest number of patent applicants. This scenario is marked by a significant number of residents seeking legal protection and a less significant number of non-residents. In contrast, the United States shows the opposite pattern, with non-residents filing more patents, indicating that foreign inventors actively seek US legal protection. Other countries, in turn, follow a similar pattern to China, but with considerably lower filing volumes. In short, technological progress is crucial to ensuring steady economic growth. However, this progress is not accidental, requiring a decisive effort to lay the necessary foundations, which implies prioritizing investment in areas such as universities, technical schools, and knowledge production centers. In this context, climate investment presents itself as an additional catalyst for this technological progress, and will not be directed exclusively at means that seek to reduce environmental impact, like palliative measures for a patient already doomed, but will instead point to solutions that aim to attack the problems at their core. Therefore, in the new socioeconomic and environmental paradigm, technological progress, as an engine of economic growth, requires priority attention to green technologies. REFERENCES MANKIW, N. Gregory. Introdução à economia: tradução da 5ª edição norte-americana. São Paulo: Cengage Learning, 2009. QUEIROZ, Luiz. Patentes revelam que a Ásia assumiu a vanguarda da inovação. Capital Digital, 09 nov. 2025. Disponível em: https://capitaldigital.com.br/patentes-revelam-que-asia-assumiu-a-vanguarda-da-inovacao/. Acesso em: 12 jan. 2026. ROMER, Paul. Paul Romer: [Sítio pessoal]. Disponível em: https://paulromer.net/. Acesso em: 09 jan. 2026.
