Economic complexities and environmental degradation: evidence from OECD countries

Muhammad Tariq Majeed (), Maria Mazhar (), Isma Samreen () and Aisha Tauqir ()
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Muhammad Tariq Majeed: Quaid-I-Azam University
Maria Mazhar: Quaid-I-Azam University
Isma Samreen: Quaid-I-Azam University
Aisha Tauqir: Quaid-I-Azam University

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2022, vol. 24, issue 4, No 59, 5846-5866

Abstract: Abstract This study investigates the impact of economic complexity on carbon emissions for OECD countries over the period 1971–2018. Economic complexity is taken as an indicator of the sophisticated and knowledge-based production process of an economy. The empirical analysis is conducted by using both the first- and second-generation panel unit root tests (URTs) and panel cointegration tests, cross-sectional dependence tests, error correction model (ECM), fully modified ordinary least squares (FMOLS) and fixed effects quantile regression (FE-QR). According to panel URTs and panel cointegration tests, all variables are stationary at the first difference and cointegrated, respectively. The FMOLS results reveal that the impact of economic complexity on carbon emissions is positive and statistically significant in the long run. In addition, the environmental Kuznets curve theory is also validated in these economies. The FE-QR results suggest that the impact of economic complexity on emissions is higher in the economies where carbon emissions are low.

Keywords: Economic complexity; Carbon emissions; Panel quantile; Fixed effects quantile; Regressors by quantile; Foreign direct investment (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s10668-021-01687-4

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