Title: The load capacity curve and foreign aid in recipient countries: an empirical investigation

Authors: Nouran M. Taha; Dalia M. Ibrahiem; Rasha Sameh

Addresses: Faculty of Economics and Political Science, Cairo University, Giza, 12613, Egypt ' Faculty of Economics and Political Science, Cairo University, Giza, 12613, Egypt ' Faculty of Economics and Political Science, Cairo University, Giza, 12613, Egypt

Abstract: Despite growing interest in the load capacity factor as a comprehensive indicator of environmental quality, research on its determinants, especially in cross-country and developing economies contexts, remains limited. This study examines the load capacity curve, linking environmental quality (measured using the load capacity factor) and economic growth, while exploring how foreign aid influences ecological outcomes in developing nations. The analysis follows a two-step approach. The study first employs quantile regression, identifying an N-shaped load capacity curve across quantiles. Next, a threshold model is employed to capture the nonlinear impact of foreign aid. Results reveal that lower aid levels correlate with environmental degradation, but exceeding a 7% gross national income threshold shifts the relationship to positive. Notably, this threshold alters the curve from N-shaped to inverted-N, emphasising that no universal pattern exists across developing countries. These findings emphasise the importance of foreign aid in guiding economic growth toward more sustainable outcomes.

Keywords: load capacity curve; LCC; official development assistance; renewable energy; quantile regression; threshold model.

DOI: 10.1504/IJGE.2026.151904

International Journal of Green Economics, 2026 Vol.20 No.1, pp.72 - 88

Received: 24 Nov 2024
Accepted: 12 May 2025
Published online: 25 Feb 2026 *

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