Building Climate-Resilient Budgets in Developing Economies: An fsQCA Approach to Fiscal Rules, Green Spending, and Institutional Quality

Abstrak

This study investigates how fiscal rules, green spending, institutional quality, and climate vulnerability interact to foster climate-resilient budgets in developing economies. Using a fuzzy-set Qualitative Comparative Analysis (fsQCA) approach, it identifies multiple sufficient configurations that explain fiscal resilience under environmental stress. Data were drawn from the IMF Fiscal Rules Dataset, OECD green budgeting indicators, World Bank Governance Indicators, and the ND-GAIN Index for 11 developing countries in 2022. Each variable was calibrated into fuzzy-set values (0–1) to capture their degree of membership in the outcome set of budget resilience. The analysis reveals two main pathways: (1) a Fiscal–Institutional Path (FR × IQ × ~CV), where fiscal rules supported by strong institutions and low climate vulnerability yield budget resilience even with limited green expenditure; and (2) a Green–Governance Path (GS × IQ × ~CV), where green spending contributes to resilience when reinforced by effective institutions and environmental stability. Both configurations highlight institutional quality and climate resilience as core enabling conditions. The findings underscore that fiscal stability in climate-vulnerable economies depends on institutional complementarity the interaction of fiscal discipline, governance capacity, and environmental management and provide policy guidance for building sustainable and resilient fiscal frameworks