DOES CLIMATE CHANGE PRESSURE CONSTRAIN SUSTAINABLE DEVELOPMENT? EVIDENCE FROM SELECTED ASIAN ECONOMIES

Abstract

The rising economic boom in Asia is beginning to meet a more difficult challenge: how to grow an economy that is also a long-term wealth producer and has continued rising emissions of greenhouse gases? This is particularly relevant in an area where the development rate, carbon intensity and environmental challenges are not happening simultaneously across the countries. The present study investigates the long-term relationship between climate change pressure and sustainable development in 21 selected Asian economies for the period 2000–2021. Sustainable development is evaluated by the modified adjusted net savings indicator SD*. The analysis uses a unit root test by CIPS, a Westerlund cointegration test, a Pesaran–Yamagata slope heterogeneity test, and a Common Correlated Effects Mean Group estimator with a bootstrap inference. The findings show that the cross-sectional dependence is high and the heterogeneity of slopes is significant. While the climate change pressure has negative and statistically insignificant relationship, and the economic development coefficient is positive and statistically significant for sustainable development. The findings suggest that sustainability relationships are not the same across Asian economies, highlighting the importance of country-specific climate and development strategies.