Economic complexity and environmental pollution: Evidence from the former socialist transition countries

Florian Bucher, Lucas Scheu and Benedikt Schröpf

No 218, Working Papers from Bavarian Graduate Program in Economics (BGPE)

Abstract: This study examines the link between economic complexity and environmental quality by exploiting the similar starting points of the former socialist transition countries after the fall of the iron curtain. We refer to the extended theories of the Environmental Kuznets Curve (EKC), stating that environmental pollution follows an inverted u-shaped course with respect to economic complexity. Using comprehensive data of 27 countries for the period 1995-2017, our results show that the EKC can be found for countries whose complexity rose over time. Additionally, since the results for production-based and consumption-based CO2 emissions are similar, we can discard emissions offshoring as a major explaining factor. Consequently, our findings suggest that more complex products are the drivers of the EKC. However, as the turning point is associated with high levels of pollution, our estimates imply that complexity may even exacerbate environmental issues in the short and middle run in less developed countries.

Keywords: Economic Complexity; Environmental Kuznets Curve; Former Socialist States preference transmission (search for similar items in EconPapers)
JEL-codes: O44 P28 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2022-05
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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