The Effect of Innovation on Climate Resilience in Developing Countries: Evidence from a Panel Quantile Regression Approach

This study examines the effect of innovation on climate resilience in developing countries, covering annual data from 2008 to 2022, with a focus on how this relationship varies across different levels of vulnerability. The primary purpose is to understand whether innovation contributes uniformly to climate resilience or if its impact differs depending on a country’s resilience status. Addressing this question is crucial for developing evidence-based and context-specific climate policies. To capture these heterogeneous effects, this study employs a panel quantile regression approach using data from developing countries. This method allows the estimation of the influence of innovation proxied by the Global Innovation Index (GII) and the climate resilience Index. The findings show that innovation has a consistently positive and statistically strong impact on climate resilience across all quantiles, with the strongest impact at the median. The results carry important policy implications. Firstly, developing countries should prioritize innovation-driven strategies to strengthen resilience across different climate risk profiles. Secondly, policies supporting renewable energy deployment should target countries with higher emissions to maximize their impact. Thirdly, fiscal tools, such as environmentally aligned tax policies, should be emphasized particularly in more vulnerable contexts. Finally, trade policies, population dynamics and integration of climate finance variables must be integrated into climate strategies to enhance long-term sustainability.