Impact of Knowledge-Based Economy on Climate Change: A Comparative Study of Asian Developing and G-7 Countries

Abstract

Climate change can be observed in all aspects of nature's behaviour. The terrible implications of climate change for the planet and its inhabitants necessitate immediate intervention. The UN SDGs aim to address global, regional, and national development needs. This study examines the link between the knowledge-based economy and SDG13-Climate Action using annual balanced panel data from 2000 to 2023 for Asian developing and G7 countries. A series of pre-estimation tests, including cross-sectional dependence, panel unit root tests and panel cointegration tests. The second-generation CS-ARDL model is employed to analyse short-run and long-run dynamics. The panel causality test evaluates causal links between the variables. The results indicate a substantial adverse effect of the knowledge-based economy on climate change in both advanced and developing countries. Renewable energy consumption and foreign direct investment mitigate climate change, whereas urbanization exacerbates it. The p-value of KE in developing nations is 0.05, indicating a 5% upsurge in KE leads to a 0.20% reduction in climate change in the long run. Advanced G7 nations parameter values show a 1% increase in KE leads to a 3.79% reduction in climate change in the long run. The results demonstrate that G7 countries, with their advanced knowledge infrastructures, high levels of technological innovation, and robust institutional frameworks, are better positioned to integrate KE principles into climate action policies. While Asian developing countries, face structural constraints that hinder their ability to leverage the knowledge economy for climate action effectively. The research provides stakeholders, investors, and policy makers with valuable insights.