Does Distributive Conflict Explain Variation in Green Stimulus Spending? Evidence From 40 Major Economies During the Global Financial Crisis and the Covid‐19 Recession

Abstract

The 2008 Global Financial Crisis (GFC) and the 2020 Covid‐19 pandemic triggered large economic stimulus packages in most countries. While aimed primarily at saving the domestic economy from widespread bankruptcies and mass unemployment, these stimulus packages also offered governments windows of opportunity for pivoting toward decarbonization. Drawing on a new dataset covering 40 of the world's largest economies' stimulus spending during the two crises, this article addresses two questions: (1) Did the allocation toward green investments increase in government stimulus packages from the GFC to the Covid‐19 downturn? (2) What country characteristics are associated with green stimulus spending in each crisis? Grounded in distributive‐conflict theory, we hypothesize that the relative strength of green and fossil stakeholders in the economy is decisive in shaping climate policy outcomes. Consistent with this theory, our empirical analysis reveals (1) a (small) uptick in major economies' net green spending from 2008 to 2020 and (2) that robust green industrial interests strongly predict cross‐country variation in green stimulus spending. In contrast, countries' levels of fossil fuels production did not exert a proportional influence. Notably, our research also uncovers a pattern of path dependency, with countries leading in green stimulus spending during the GFC maintaining this position also through the Covid‐19 pandemic. Overall, this article contributes new insights to the comparative political economy literature on climate change by analyzing how economic recessions affect the energy transition and how economic structures drive cross‐country variation in investment‐based climate policy.