Digital economy moderates the negative effect of climate vulnerability on sustainable development goals: a global perspective

Drawing on resilience and resource-efficient theories, this paper fills significant research gap by explicitly investigating the interplay among climate vulnerability, the digital economy, and Sustainable Development Goals across the globe over the period 2000 to 2023. We employ rigorous econometric methodologies, including Driscoll-Kraay fixed effects, two-step system GMM, generalised quantile regression (GQR), and smooth instrumental variable quantile regression (SIVQR). This study finds that an increase in climate vulnerability reduces Sustainable Development Goal (SDG) achievement by 0.243. These findings are further confirmed through robustness checks, including omitted-variable bias, COVID-19 effects, and endogeneity checks. Second, we find that the digital economy positively moderates the negative relationship between climate vulnerability and the Sustainable Development Goals, offsetting this effect by 0.544. Third, heterogeneous analyses reveal that the adverse effects of climate vulnerability are more pronounced in economies characterised by low income, low renewable energy infrastructure, and high military expenditure. These insights underscore the critical need for targeted policy interventions to enhance digital development and unlock the full potential, particularly in low-income developing economies.