Human capital, digitalization and R&D expenditures: is government effectiveness key to South Asia's sustainable pathway?

In the light of growing environmental problems and the urgent need to achieve the COP targets, this study seeks to evaluate the influence of human capital (HC), digitalization (ICT) and R&D on environmental quality. This study further tests the moderating role of government effectiveness in moderating the relationship between pertinent variables.

The target region for this study was South Asia, and the data time period was 1996–2023. Data were gathered from secondary data sources, such as World Development Indicators (WDI) and Global Footprint Network (GFN). Long-run association between the variables was checked through Westerlund cointegration, Causality among the Dumitrescu-Hurlin panel causality test. The final results of the study were estimated through Fully modified ordinary least square (FMOLS) regression.

Our analysis shows that HC reduces carbon emissions (CO₂) and ecological footprint (EFP). Interestingly, this positive effect is intensified under the umbrella of effective governance. However, ICT tends to increase CO₂ and EFP and, surprisingly, the governance makes this impact even worse. R&D is found to have a positive impact on CO₂ and a negative impact on EFP. However, under the umbrella of effective governance, the CO₂ impact of R&D becomes less harmful, and its significant contribution to reducing the ecological footprint becomes more effective.

This research not only enhances existing knowledge but also offers critical insights for policymakers. It helps to achieve COP targets and sustainability initiatives in the region.