Paving the Path to Reduce Energy Poverty: Do International Financial Support for Clean Energy and Effective Governance Really Matter?

ABSTRACT Energy poverty remains a pressing challenge in South Asia, affecting economic development and social wellbeing. Addressing this issue requires a combination of financial support and effective governance. This study analyzes the role of international financial support for clean energy in alleviating energy poverty in South Asia. In addition, it examines how government effectiveness moderates this relationship. This study collected data on five South Asian economies from 1990 to 2021. We employed two different proxies for energy poverty, namely access to electricity and clean fuel technology, to obtain more robust outcomes. A Fully Modified Ordinary Least Squares (FMOLS) regression was used. The results indicate that international financial assistance for clean energy is essential for improving access to electricity and clean fuel technologies and combating energy poverty. In addition, government effectiveness has a positive, though rather weak, influence, enhancing the effect of international financial support on both proxies. This implies that more effective governance increases the capability to use external financial assistance to obtain tangible results as a key element in addressing energy poverty in South Asia. This study offers a novel perspective to address energy poverty by highlighting the combined effects of international financial support and government effectiveness. This highlights the importance of effective governance in maximizing the outcomes of financial assistance and provides valuable insights for policymakers and stakeholders focused on sustainable energy access in South Asia.