Impact of climate vulnerability on innovation: Spatial analysis and trade regulation perspectives

Xiaohang Ren, Qian Lu and Jianmei Liu

Research in International Business and Finance, 2025, vol. 77, issue PB

Abstract: Climate change poses a substantial and enduring challenge to the sustainable development of the global green economy. This study reexamines the concept of climate vulnerability by utilizing a balanced panel data covering 113 countries from 2011 to 2020 and employs a spatial econometric approach to systematically investigate both the spatial spillover effects of national innovation activities and the influence of climate vulnerability on innovation performance. In addition, this research is among the first to explore the moderating roles of international trade in the relationship between climate vulnerability and innovation. The findings reveal that global innovation capabilities are unevenly distributed, exhibiting significant regional disparities and strong positive spatial autocorrelation, which highlights the interconnected nature of innovation systems and the presence of cross-border spillovers. In the short term, climate vulnerability does not show a statistically significant impact on innovation. However, over the long term, it exerts a significantly positive effect, whereas both import-export trade and merchandise trade are found to weaken this relationship. Based on these findings, we provide policy recommendations aimed at balancing short-term economic benefits of trade with the long-term goals of climate adaptation and innovation-led development, and further emphasize that embedding sustainability into trade policy represents a vital pathway for advancing technological innovation.

Keywords: Climate vulnerability; Spatial effect; Innovation; Sustainable trade (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:77:y:2025:i:pb:s0275531925002405

DOI: 10.1016/j.ribaf.2025.102984

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