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

Author

Listed:
  • Florian Bucher

    (Andrássy University Budapest)

  • Lucas Scheu

    (Andrássy University Budapest)

  • Benedikt Schröpf

    (University of Erlangen-Nürnberg)

Abstract

This study examines the link between economic complexity and environmental pollution by exploiting a massive and unprecedented decline of CO2 emissions and complexity in 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 have influenced the u-shaped course 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.

Suggested Citation

  • Florian Bucher & Lucas Scheu & Benedikt Schröpf, 2023. "Economic complexity and environmental pollution: evidence from the former socialist transition countries," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 50(3), pages 807-847, August.
    • Handle: RePEc:kap:empiri:v:50:y:2023:i:3:d:10.1007_s10663-023-09575-y
    DOI: 10.1007/s10663-023-09575-y
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    More about this item

    Keywords

    Economic complexity; Environmental Kuznets Curve; Former socialist states;
    All these keywords.

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

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