Asymmetric Impact of Climate Change Vulnerability and Adaptive Capacity on Economic Growth in Developing Economies

Climate change has become a significant global issue, particularly impacting economic systems in developing nations. This study highlights the complex relationship between climate vulnerability (CV), adaptive capacity (AC), and economic growth (GDP) in developing economies. While previous research has largely focused on the direct effects of climate change on GDP, this study advances the literature by investigating both direct and indirect pathways using Structural Equation Modelling (SEM). Data from Asian emerging economies, covering the period 2000–2022, were sourced from the World Bank. The results reveal a significant negative direct effect of CV on GDP growth (β = –0.214, p < 0.01) and a positive, significant effect of CV on AC (β = 22.16, p < 0.001), indicating that greater climate vulnerability drives increased investment in adaptation. The findings also show that AC has a positive impact on economic growth (β = 0.007, p < 0.01), suggesting a partial mediation effect that mitigates the negative consequences of CV on GDP. These results emphasize the importance of adaptive systems in reducing climate risks and enhancing economic resilience. The study offers actionable insights for researchers and policymakers aiming to achieve resilient growth.