IDEAS home Printed from https://ideas.repec.org/a/eee/wdevel/v185y2025ics0305750x24002742.html
   My bibliography  Save this article

Economic complexity and deforestation in the Brazilian Amazon

Author

Listed:
  • Silveira, Fabricio
  • Romero, João P.
  • Queiroz, Arthur
  • Freitas, Elton
  • Stein, Alexandre

Abstract

As the Amazon rainforest faces ever-increasing deforestation, finding a balance between conservation and economic progress becomes imperative. This study investigates the relationship between regional economic complexity (ECI-R) and deforestation in municipalities within the Brazilian Amazon between 2006 and 2021. Employing different econometric techniques, we untangle the multifaceted factors determining land use choices while considering variables associated with agriculture, extraction, and livestock activities. Rigorous testing confirms the validity of our findings. The results suggest an “environmental Kuznets curve” at play in the Amazon. This means that a slight increase in regional economic complexity (0.1 unit) initially leads to a significant rise in deforestation (28 %) but is followed by a decrease (8.4 %) in the following year. Interestingly, environmental fines appear to be a powerful tool for controlling deforestation. Further analysis using Probit regressions reinforces the key roles of economic complexity and environmental enforcement. Municipalities with higher regional complexity were 20 % more likely to experience low deforestation and high employment growth between 2006 and 2011. However, this trend reversed in later periods. Ultimately, the results indicate a complex relationship between economic complexity and deforestation. These findings highlight governments’ critical role in promoting sustainable development in the Amazon. There are limits to such an approach but supporting “green” industries and curbing deforestation-related activities can steer the region towards a more prosperous and environmentally responsible future.

Suggested Citation

  • Silveira, Fabricio & Romero, João P. & Queiroz, Arthur & Freitas, Elton & Stein, Alexandre, 2025. "Economic complexity and deforestation in the Brazilian Amazon," World Development, Elsevier, vol. 185(C).
    • Handle: RePEc:eee:wdevel:v:185:y:2025:i:c:s0305750x24002742
    DOI: 10.1016/j.worlddev.2024.106804
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0305750X24002742
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.worlddev.2024.106804?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Elton Eduardo Freitas & João Prates Romero & Gustavo Britto & Alexandre de Queiroz Stein & Ramon Torres, 2023. "Dataviva: espaço de atividades e indicadores regionais de complexidade econômica," Textos para Discussão Cedeplar-UFMG 657, Cedeplar, Universidade Federal de Minas Gerais.
    2. B D Spracklen & M Kalamandeen & D Galbraith & E Gloor & D V Spracklen, 2015. "A Global Analysis of Deforestation in Moist Tropical Forest Protected Areas," PLOS ONE, Public Library of Science, vol. 10(12), pages 1-16, December.
    3. Romero, João P. & Gramkow, Camila, 2021. "Economic complexity and greenhouse gas emissions," World Development, Elsevier, vol. 139(C).
    4. Hartmann, Dominik & Guevara, Miguel R. & Jara-Figueroa, Cristian & Aristarán, Manuel & Hidalgo, César A., 2017. "Linking Economic Complexity, Institutions, and Income Inequality," World Development, Elsevier, vol. 93(C), pages 75-93.
    5. Juliano Assunção & Clarissa Gandour & Romero Rocha & Rudi Rocha, 2020. "The Effect of Rural Credit on Deforestation: Evidence from the Brazilian Amazon," The Economic Journal, Royal Economic Society, vol. 130(626), pages 290-330.
    6. Azevedo-Ramos, Claudia & Moutinho, Paulo, 2018. "No man’s land in the Brazilian Amazon: Could undesignated public forests slow Amazon deforestation?," Land Use Policy, Elsevier, vol. 73(C), pages 125-127.
    7. Andersen,Lykke E. & Granger,Clive W. J. & Reis,Eustaquio J. & Weinhold,Diana & Wunder,Sven, 2002. "The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon," Cambridge Books, Cambridge University Press, number 9780521811972, June.
    8. Angelsen, Arild, 1999. "Agricultural expansion and deforestation: modelling the impact of population, market forces and property rights," Journal of Development Economics, Elsevier, vol. 58(1), pages 185-218, February.
    9. Hausmann, Ricardo & Hidalgo, Cesar, 2014. "The Atlas of Economic Complexity: Mapping Paths to Prosperity," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262525429, December.
    10. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    11. David Roodman, 2006. "How to Do xtabond2," North American Stata Users' Group Meetings 2006 8, Stata Users Group.
    12. Jorge Hargrave & Krisztina Kis-Katos, 2013. "Economic Causes of Deforestation in the Brazilian Amazon: A Panel Data Analysis for the 2000s," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(4), pages 471-494, April.
    13. Stabile, Marcelo C.C. & Guimarães, André L. & Silva, Daniel S. & Ribeiro, Vivian & Macedo, Marcia N. & Coe, Michael T. & Pinto, Erika & Moutinho, Paulo & Alencar, Ane, 2020. "Solving Brazil's land use puzzle: Increasing production and slowing Amazon deforestation," Land Use Policy, Elsevier, vol. 91(C).
    14. Paulo Moutinho & Claudia Azevedo-Ramos, 2023. "Author Correction: Untitled public forestlands threaten Amazon conservation," Nature Communications, Nature, vol. 14(1), pages 1-1, December.
    15. Paulo Moutinho & Claudia Azevedo-Ramos, 2023. "Untitled public forestlands threaten Amazon conservation," Nature Communications, Nature, vol. 14(1), pages 1-4, December.
    16. Luciana V. Gatti & Luana S. Basso & John B. Miller & Manuel Gloor & Lucas Gatti Domingues & Henrique L. G. Cassol & Graciela Tejada & Luiz E. O. C. Aragão & Carlos Nobre & Wouter Peters & Luciano Mara, 2021. "Amazonia as a carbon source linked to deforestation and climate change," Nature, Nature, vol. 595(7867), pages 388-393, July.
    17. Laura J. Sonter & Diego Herrera & Damian J. Barrett & Gillian L. Galford & Chris J. Moran & Britaldo S. Soares-Filho, 2017. "Mining drives extensive deforestation in the Brazilian Amazon," Nature Communications, Nature, vol. 8(1), pages 1-7, December.
    18. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    19. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chu, Lan Khanh & Hoang, Dung Phuong, 2020. "How does economic complexity influence income inequality? New evidence from international data," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 44-57.
    2. Nguyen, Canh Phuc, 2022. "Does economic complexity matter for the shadow economy?," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 210-227.
    3. Kamguia, Brice & Tadadjeu, Sosson & Miamo, Clovis & Njangang, Henri, 2022. "Does foreign aid impede economic complexity in developing countries?," International Economics, Elsevier, vol. 169(C), pages 71-88.
    4. Trung V. Vu, 2022. "Does institutional quality foster economic complexity? The fundamental drivers of productive capabilities," Empirical Economics, Springer, vol. 63(3), pages 1571-1604, September.
    5. Kinda, Harouna & Thiombiano, Noel, 2021. "The effects of extractive industries rent on deforestation in developing countries," Resources Policy, Elsevier, vol. 73(C).
    6. Nguyen, Canh Phuc, 2021. "Gender equality and economic complexity," Economic Systems, Elsevier, vol. 45(4).
    7. Gertjan Dordmond & Heder Carlos Oliveira & Ivair Ramos Silva & Julia Swart, 2021. "The complexity of green job creation: An analysis of green job development in Brazil," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(1), pages 723-746, January.
    8. Lan Khanh Chu & Huong Hoang Diep Truong & Hoang Phuong Dung, 2023. "Unveiling the influence of economic complexity and economic shocks on output growth volatility: evidence from a global sample," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 13(3), pages 637-676, December.
    9. Heng, Dyna, 2011. "Capital flows and real exchange rate: does financial development matter?," MPRA Paper 48553, University Library of Munich, Germany, revised May 2012.
    10. Zheng, Xinye & Li, Fanghua & Song, Shunfeng & Yu, Yihua, 2013. "Central government's infrastructure investment across Chinese regions: A dynamic spatial panel data approach," China Economic Review, Elsevier, vol. 27(C), pages 264-276.
    11. Holger Zemanek & Ansgar Belke & Gunther Schnabl, 2009. "Current Account Imbalances and Structural Adjustment in the Euro Area: How to Rebalance Competitiveness," Discussion Papers of DIW Berlin 895, DIW Berlin, German Institute for Economic Research.
    12. Patrizia Ordine & Giuseppe Rose, 2008. "Local Banks Efficiency and Employment," LABOUR, CEIS, vol. 22(3), pages 469-493, September.
    13. Jing Li & Tsun Se Cheong & Jianfa Shen & Dahai Fu, 2019. "Urbanization And Rural–Urban Consumption Disparity: Evidence From China," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(04), pages 983-996, September.
    14. Matjaž Volk & Polona Trefalt, 2014. "Access to Credit as a Growth Constraint," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 1(1), pages 29-39.
    15. Klein, Paul-Olivier & Weill, Laurent, 2022. "Bank profitability and economic growth," The Quarterly Review of Economics and Finance, Elsevier, vol. 84(C), pages 183-199.
    16. Möller Joachim & Tubadji Annie, 2009. "The Creative Class, Bohemians and Local Labor Market Performance: A Micro-data Panel Study for Germany 1975–2004," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 229(2-3), pages 270-291, April.
    17. Nguyen Phuc Canh & Nguyen Thanh Binh & Su Dinh Thanh & Christophe Schinckus, 2020. "Determinants of foreign direct investment inflows: The role of economic policy uncertainty," International Economics, CEPII research center, issue 161, pages 159-172.
    18. Poelhekke, Steven, 2011. "Urban growth and uninsured rural risk: Booming towns in bust times," Journal of Development Economics, Elsevier, vol. 96(2), pages 461-475, November.
    19. Shao, Shuai & Yang, Lili & Yu, Mingbo & Yu, Mingliang, 2011. "Estimation, characteristics, and determinants of energy-related industrial CO2 emissions in Shanghai (China), 1994-2009," Energy Policy, Elsevier, vol. 39(10), pages 6476-6494, October.
    20. Harald Oberhofer & Marian Schwinner, 2017. "Do Individual Salaries Depend On the Performance of the Peers? Prototype Heuristic and Wage Bargaining in the NBA," WIFO Working Papers 534, WIFO.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:wdevel:v:185:y:2025:i:c:s0305750x24002742. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/worlddev .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.