Economic complexity and the environment: some estimates on their links

Abstract

The concept of economic complexity and the relevant economic complexity index (ECI) have been introduced in the theory and empirics of economic growth. As a consequence, the literature on economic complexity covers its relationship with several factors related to growth including environmental implications. Using traditional non-parametric statistics methods, the study investigates again the relationship between economic complexity and per capita incomes, and the relationship between economic complexity and the environment. Environmental variables used are the environmental performance index (EPI), the per capita ecological footprint of consumption, EFcpc and the per capita ecological footprint of production, EFppc. The relationships are studied for a large set of economies as a whole, and for countries of two different levels of development, as measured by the human development index (HDI). Results confirm the positive relationship between per capita incomes and economic complexity while those with regards to environmental implications depend on the environmental index chosen and the level of development. Economic complexity is positively associated with the strain on the environment shown by the ecological footprints, but positively associated also with the environmental performance of policies given by the EPI.