Abstract
Abstract The paper examines the Environmental Kuznets Curve (EKC) model in the panel of the most complex economies in the world by considering the ecological footprint as an indicator of environmental degradation and economic complexity - as a variable of interest and expression of structural changes in the economy. The study includes the first 48 complex economies in the world, with positive averages of the Economic Complexity Index (ECI) for 1995-2017. The model of cointegrating polynomial regression (CPR) includes also variables with impact on ecological footprints such as globalization, energy intensity and urbanization. The EKC model is validated in the panel of the 48 complex economies, suggesting that these countries have already reached a development stage enabling them to curb the increasing pollution expressed by ecological footprint. Globalization has a mitigating effect while urbanization and energy intensity have an extension effect on ecological footprint. Policy implications are also included.
Highlights
The rising levels of environmental degradation threaten sustainability and prosperity around the world in economies of different stages of development
The present paper explores the relationship between economic complexity and ecological footprint by using the Environmental Kuznets Curve (EKC) model where replaces the variable income with variable economic complexity in a panel data model including 48 complex economies for 1995 to 2017
Conclusions and policy implications The paper intended to check the validity of the Environmental Kuznets Curve hypothesis by replacing the variable "income" with the "economic complexity" index (ECI) as a proxy for economic activity for the 48 most complex economies in the world and using ecological footprint as indicator of environmental degradation
Summary
The rising levels of environmental degradation threaten sustainability and prosperity around the world in economies of different stages of development. Can and Gozgor (2017) introduced ECI for the first time in the EKC model in the case of the French economy for the period of 1964-2014 They illustrated that, in the long run, higher economic complexity can suppress the level of pollution (CO2 emissions). Pata (2021) studied the impact of ECI, globalization, and non-renewable and renewable energy consumption on environmental pollution (expressed by CO2 emissions and ecological footprint) in the case of the US economy. Pata (2021) included in the analysis of the effect of economic complexity on pollution other explanatory variables (i.e. renewable and non-renewable energy, globalization) and validated the inverted U-shaped relationship between economic complexity and pollution expressed by CO2 emissions and ecological footprint. The environmental Kuznets curve of economic complexity and environmental quality (measured by ecological footprint and CO2 emissions) holds for these countries
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