Financing the Climate

Financial processes have changed how economic growth is carried out, yet little research has been done examining how financialization affects the well-established association between economic activity and emissions. We construct fixed effects regression analyses with robust standard errors for 172 nations between 1960 and 2014. In this article, we estimate financial processes’ moderation of the association between GDP per capita and CO2 emissions per capita, as well as whether or not such processes reduce the environmental intensity of manufacturing activities. We find that financialization decouples total GDP per capita from emissions per capita but fails to do so for growth from manufacture. Noting the absolute rise in manufacturing activity, we argue that the economic reorganization that financialization represents may obfuscate the ongoing pressure that economic growth places on the environment.