Does higher innovation intensity matter for abating the climate crisis in the presence of economic complexities? Evidence from a Global Panel Data.

Abstract

Industrial development generally entails a structural transition from resource-based and low-technology activities to medium- and high-tech industrial (MHT) activities that represent higher innovation intensity. A modern, highly complex production structure creates better opportunities for skills development and technological innovation. The present study examines the relationship between innovation intensity and climate change crises by incorporating the factor of economic complexities. For this purpose, we used panel data pertaining to 120 global economies from 1996 to 2019 and applied the CS-ARDL estimation technique to achieve empirically valid results. The outcomes of the estimations revealed that real GDP, trade openness, energy use, and economic complexities have a positive and significant relationship with climate change crises in these economies, whereas innovation intensity has a negative and significant relationship with climate change crises. However, the joint effect of the interaction between innovation intensity and real GDP with economic complexities is positive and significant in terms of climate change crises. Thus, the study concludes that higher innovation intensity has a significant role in determining climate change crises in the presence of complex economic structures.