Does economic complexity matter for environmental degradation? An empirical analysis for different stages of development

  • Buhari Doğan
  • Behnaz SabooriEmail author
  • Muhlis Can
Research Article


This study is among the first attempts to examine the effect of economic complexity as an indicator of sophisticated and knowledge-based production structures on CO2 emissions for 55 countries over the period of 1971–2014. The countries considered fall into three different income groups, namely high income, higher middle income, and lower middle income. The study employs the panel quantile regression methodology and tests the existence of the environmental Kuznets curve (EKC) hypothesis by including economic complexity and other control variables such as energy consumption, urbanization, and trade openness in its model. The results show that economic complexity has significant impacts on the environment. Based on the analysis, economic complexity has increased the environmental degradation in lower and higher middle-income countries, and has controlled CO2 emissions in high-income countries. Since economic complexity plays a significant role in environmental damage, it is crucial for low- and middle-income countries to adjust their current industrial and production policies to promote economic growth and at the same time protect the environment.


Economic complexity CO2 emissions Panel quantile regression Environmental Kuznets curve 



  1. Ahmed K, Shahbaz M, Kyophilavong P (2016) Revisiting the emissions energy-trade nexus: evidence from the newly industrializing countries. Environ Sci Pollut Res 23(8):7676–7691Google Scholar
  2. Al Sayed AR, Sek SK (2013) Environmental Kuznets Curve: evidences from developed and developing economies. Appl Math Sci 7(22):1081–1092Google Scholar
  3. Aldy JE (2005) An environmental Kuznets curve analysis of US state-level carbon dioxide emissions. J Environ Dev 14(1):48–72Google Scholar
  4. Al-mulali U, Ozturk I (2016) The investigation of environmental Kuznets curve hypothesis in the advanced economies: the role of energy prices. Renew Sust Energ Rev 54:1622–1631Google Scholar
  5. Al-mulali U, Ozturk I, Lean HH (2015, 79) The influence of economic growth, urbanization, trade openness, financial development, and renewable energy on pollution in Europe. Nat Hazards:621–644Google Scholar
  6. Apergis N, Ozturk I (2015) Testing environmental Kuznets curve hypothesis in Asian countries. Ecol Indic 52:16–22Google Scholar
  7. Apergis N, Payne JE (2010) The emissions, energy consumption, and growth nexus: evidence from the common wealth of independent states. Energy Policy 38:650–655Google Scholar
  8. Apergis N, Can M, Gozgor G, Lau CKM (2018) Effects of export concentration on CO2 emissions in developed countries: an empirical analysis. Environ Sci Pollut Res 25(14):14106–14116Google Scholar
  9. Arouri MEH, Youssef AB, M’henni H, Rault C (2012) Energy consumption, economic growth and CO2 emissions in Middle East and North African countries. Energy Policy 45:342–349Google Scholar
  10. Aye GC, Edoja PE (2017) Effect of economic growth on CO2 emission in developing countries: evidence from a dynamic panel threshold model. Cogent Economics Finance 5:1. Google Scholar
  11. Baker M (2016) GENQREG: stata module to perform Generalized Quantile Regression. Statistical Software Components S458158, Boston College Department of EconomicsGoogle Scholar
  12. Balin BE, Akan HDM (2015) EKC hypothesis and the effect of innovation: a panel data analysis. J Bus Econ Finance 4(1):81–91Google Scholar
  13. Can M, Dogan B (2017) The effects of economic structural transformation on employment: an evaluation in the context of economic complexity and product space theory. In: Yenilmez F, Kilic E (eds) Handbook of research on unemployment and labor market sustainability in the era of globalization. IGI Global Publishing, Hershey, pp 275–306Google Scholar
  14. Can M, Gozgor G (2017) The impact of economic complexity on carbon emissions: evidence from France. Environ Sci Pollut Res 24:16364–16370Google Scholar
  15. Canay IA (2011) A simple approach to quantile regression for panel data. Econ J 14(3):368–386. Google Scholar
  16. Churchill SA, Inekwe J, Smyth R, Zhang X (2019) R&D intensity and carbon emissions in the G7: 1870–2014. Energy Econ 80:30–37Google Scholar
  17. Cole MA, Rayner AJ, Bates JM (1997) The environmental Kuznets curve: an empirical analysis. Environ Dev Econ 2(4):401–416Google Scholar
  18. De Vita G, Katircioglu S, Altinay L, Fethi S, Mercan M (2015) Revisiting the environmental Kuznets curve hypothesis in a tourism development context. Environ Sci Pollut Res 22(21):16652–16663Google Scholar
  19. Destek MA, Balli E, Manga M (2016) The relationship between CO2 emission, energy consumption, urbanization and trade openness for selected CEECs. Res World Econ 7(1):52–58Google Scholar
  20. Dinda S (2004) Environmental Kuznets curve hypothesis: a survey. Ecol Econ 49(4):431–455Google Scholar
  21. Dogan E, Seker F (2016) The influence of real output, renewable and non–renewable energy, trade and financial development on carbon emissions in the top renewable energy countries. Renew Sust Energ Rev 60:1074–1085Google Scholar
  22. Dutt K (2009) Governance, institutions and the environment-income relationship: a cross-country study. Environ Dev Sustain 11(4):705–723Google Scholar
  23. Fan Y, Lui L-C, Wu G, Wie YM (2006) Analyzing impact factors of CO2 emissions using the STIRPAT model. Environ Impact Assess Rev 26(4):377–395Google Scholar
  24. Fang J, CKM L, Lu Z, Wu W, Zhu L (2019) Natural disasters, climate change, and their impact on inclusive wealth in G20 countries. Environ Sci Pollut Res 26(2):1455–1463Google Scholar
  25. Farhani S, Rejeb JB (2012) Link between economic growth and energy consumption in over 90 countries. Interdis J of Contem Res in Bus 11(3):282–297. Interdis. J. of Contem. Res. in BusGoogle Scholar
  26. Felipe J, Kumar U, Abdon A (2010) As you saw so shall you reap: from capabilities to opportunities. The Levy Economics Institute, Working Paper Collection, 613m,Google Scholar
  27. Flores CA, Flores-Lagunes A, Kapetanakis D (2014) Lessons from quantile panel estimation of the environmental Kuznets curve. Aust Econ Rev 33(8):815–853Google Scholar
  28. Galeotti M, Lanza A (1999a) Desperately seeking(environmental)Kuznets. Working Paper CRENoS 199901, Centre for North South EconomicGoogle Scholar
  29. Galeotti M, Lanza A (1999b) Richer and cleaner? A study on carbon dioxide emissions in developing countries. Energy Policy 27(10):565–573Google Scholar
  30. Galeotti M, Lanza A, Pauli F (2006) Reassessing the environmental Kuznets curve for CO2 emissions: a robustness exercise. Ecol Econ 57(1):152–163Google Scholar
  31. Galvao AAF Jr (2011) Quantile regression for dynamic panel data with fixed effects. J Econ 164(1):142–157Google Scholar
  32. Gaspar JDS, Marques AC, Fuinhas JA (2017) The traditional energy–growth nexus: a comparison between sustainable development and economic growth approaches. Ecol Indic 75:286–229Google Scholar
  33. Gozgor G, Can M (2016) Export product diversification and the environmental Kuznets curve: evidence from Turkey. Environ Sci Pollut Res 23(21):21594–21603Google Scholar
  34. Gozgor G, Can M (2017a) Causal linkages among the product diversification of exports, economic globalization and economic growth. Rev Dev Econ 21(3):888–908Google Scholar
  35. Gozgor G, Can M (2017b) Does export quality matter for CO2 emissions? Evidence from China. Environ Sci Pollut Res 24(3):2866–2875Google Scholar
  36. Grossman GM, Krueger AB (1992) Environmental Impacts of a North American Free Trade Agreement. Woodrow Wilson School, Princeton, New JerseyGoogle Scholar
  37. Grossman MG, Krueger AB (1995) Economic growth and the environment. Q J Econ 5:353–377Google Scholar
  38. Haseeb A, Xia E, Danish Baloch MA, Abbas K (2018) Financial development, globalization, and CO2 emission in the presence of EKC: evidence from BRICS countries. Environ Sci Pollut Res 31(25):31283–31296Google Scholar
  39. Hausmann R, Hwang J, Rodrik D (2007) What you export matters. J Econ Growth 12(1):1–25Google Scholar
  40. Heidari H, Katircioğlu ST, Saeidpour L (2015) Economic growth, CO2 emissions, and energy consumption in the five ASEAN countries. Int J Electr Power Energy Syst 64:785–791Google Scholar
  41. Hidalgo CA (2009) The dynamics of economic complexity and the product space over a 42 year period. CID Working Paper, Harvard University, 189Google Scholar
  42. Hill RJ, Magnani E (2002) An exploration of the conceptual and empirical basis of the environmental Kuznets curve. Aust Econ Pap 41(2):239–254Google Scholar
  43. Holtz-Eakin D, Selden T (1995) Stoking the fires? CO2 emissions and economic growth. J Public Econ 57:85–101Google Scholar
  44. Ibrahim MH, Law SH (2015) Institutional quality and CO2 emission–trade relations: 8 evidence from Sub-Saharan Africa. S Afr J Econ 84(2):323–340Google Scholar
  45. IEA (ed) (2013) CO2 emissions from fuel combustion highlights, 2013 ed. IEA, ParisGoogle Scholar
  46. Iwata H, Okada K, Samreth S (2011) A note on the environmental Kuznets curve for CO2: a pooled mean group approach. Appl Energy 88(5):1986–1996Google Scholar
  47. Jarvis AJ, Leedal DT, Hewitt CN (2012) Climate-society feedbacks and the avoidance of dangerous climate change. Nat Clim Chang 2(9):668–671Google Scholar
  48. Jebli MB, Youssef SB, Ozturk I (2016) Testing environmental Kuznets curve hypothesis: The role of renewable and non-renewable energy consumption and trade in OECD countries. Ecol Indic 60:824–831Google Scholar
  49. Jobert T, Karanfil F, Tykhonenko A (2011) Environmental Kuznets Curve for carbon dioxide emissions: lack of robustness to heterogeneity? Working Paper, Université Nice Sophia AntipolisGoogle Scholar
  50. Kasman A, Duman YS (2015) CO2 emissions, economic growth, energy consumption, trade and urbanization in new EU member and candidate countries: a panel data analysis. Econ Model 44:97–103Google Scholar
  51. Katircioglu ST (2014a) Testing the tourism-induced EKC hypothesis: the case of Singapore. Econ Model 41:383–391Google Scholar
  52. Katircioglu ST (2014b) International tourism, energy consumption, and environmental pollution: the case of Turkey. Renew Sust Energ Rev 36:180–187Google Scholar
  53. Katircioglu S, Katircioglu S (2018a) Testing the role of fiscal policy in the environmental degradation: the case of Turkey. Environ Sci Pollut Res 25(6):5616–5630Google Scholar
  54. Katircioglu S, Katircioglu S (2018b) Testing the role of urban development in the conventional environmental Kuznets curve: evidence from Turkey. Appl Econ Lett 25(11):741–746Google Scholar
  55. Katircioglu S, Katircioglu ST, Kilinc CC (2018) Investigating the role of urban development in the conventional environmental Kuznets curve: evidence from the globe. Environ Sci Pollut Res 25(15):15029–15035Google Scholar
  56. Kaufmann KR, Davidsdottir B, Garnham S, Pauly P (1998) The determinants of atmospheric SO2 concentrations: reconsidering the environmental Kuznets curve. Ecol Econ 25(2):209–220Google Scholar
  57. Koenker R (2004) Quantile regression for longitudinal data. J Multivar Anal 91(1):74–89Google Scholar
  58. Lall S (2000) The technological structure and performance of developing country manufactured exports, 1985-1998. Quenn Elizabeth House University of Oxford Working Paper Series, 44Google Scholar
  59. Lee JW, Brahmasrene T (2013) Investigating the influence of tourism on economic growth and carbon emissions: evidence from panel analysis of the European Union. Tour Manag 38:69–76Google Scholar
  60. Lee CC, Chiu YB, Sun CH (2009) Does one size fit all? A reexamination of the environmental Kuznets curve using the dynamic panel data approach. Appl Econ Perspect Policy 31(4):751–778Google Scholar
  61. Lorente BD, Shahbaz M, Roubaud D, Fahrani S (2018) How economic growth, renewable electricity and natural resources contribute to CO2 emissions? Energy Policy 113:356–367Google Scholar
  62. Luo G, Weng JH, Zhang Q, Hao Y (2017) A reexamination of the existence of environmental Kuznets curve for CO2 emissions: evidence from G20 countries. Nat Hazards 85(2):1023–1042Google Scholar
  63. Mensah CN, Long X, Boamah KB, Bediako IA, Dauda L, Salman M (2018) The effect of innovation on CO2 emissions of OCED countries from 1990 to 2014. Environ Sci Pollut Res.
  64. Neagu O, Teodoru MR (2019) The relationship between economic complexity, energy consumption structure and greenhouse gas emission: heterogeneous panel evidence from the EU countries. Sustainability 11(2):497Google Scholar
  65. Orubu CO, Omotor DG (2011) Environmental quality and economic growth: searching for environmental Kuznets curves for air and water pollutants in Africa. Energy Policy 39(7):4178–4188Google Scholar
  66. Pao HT, Tsai CM (2010) CO2 emissions, energy consumption and economic growth in BRIC countries. Energy Policy 38:7850–7860Google Scholar
  67. Pao HT, Tsai CM (2011) Multivariate Granger causality between CO2 emissions, energy consumption, FDI (foreign direct investment) and GDP (gross domestic product): evidence from a panel of BRIC (Brazil, Russian Federation, India, and China) countries. Energy 36(1):685–693Google Scholar
  68. Paramati SR, Alam MS, Chen CF (2016) The effects of tourism on economic growth and CO2 emissions: a comparison between developed and developing economies. J Travel Res 56(6):712–724Google Scholar
  69. Pazienza P (2015) The relationship between CO 2 and foreign direct investment in the agriculture and fishing sector of OECD countries: evidence and policy considerations. Intell Econ 9(1), 55–66Google Scholar
  70. Poumanyvong, P., & Kaneko, S. (2010). Does urbanization lead to less energy use and lower CO2 emissions? A cross-country analysis. Ecological Economics, 70(2), 434-444.Google Scholar
  71. Rasoulinezhad E, Saboori B (2018) Panel estimation for renewable and non-renewable energy consumption, economic growth, CO 2 emissions, the composite trade intensity, and financial openness of the commonwealth of independent states. Environ Sci Pollut Res 25(18):17354–17370Google Scholar
  72. Rothman DS (1998) Environmental Kuznets curve - real progress or passing the buck?: a case for consumption-based approaches. Ecol Econ 25(2):177–194Google Scholar
  73. Saboori B, Sulaiman J (2013) CO2 emissions, energy consumption and economic growth in Association of Southeast Asian Nations (ASEAN) countries: a cointegration approach. Energy 55:813–822Google Scholar
  74. Sadorsky P (2014) The effect of urbanization on CO2 emissions in emerging economies. Energy Econ 41:147–153Google Scholar
  75. Sapkota P, Bastola U (2017) Foreign direct investment, income, and environmental pollution in developing countries: panel data analysis of Latin America. Energy Econ 64:206–212Google Scholar
  76. Sengupta R (1996) CO2 emission-income relationship: policy approach for climate control. Pac Asian J Energy 7:207–229Google Scholar
  77. Shafiei S, Salim RA (2014) Non-renewable and renewable energy consumption and CO2 emissions in OECD countries: a comparative analysis. Energy Policy 66:547–556Google Scholar
  78. Shahbaz M, Nasir MA, Roubaud D (2018) Environmental degradation in France: the effects of FDI, financial development, and energy innovations. Energy Econ 74:843–857Google Scholar
  79. Sharma SS (2011) Determinants of carbon dioxide emissions: empirical evidence from 69 countries. Appl Energy 88(1):376–382Google Scholar
  80. Shuai C, Chen X, Shen L, Jiao L, Wu Y, Tan Y (2017) The turning points of carbon Kuznets curve: evidences from panel and time–series data of 164 countries. J Clean Prod 162:1031–1047Google Scholar
  81. Sinha A, Sen S (2016) Atmospheric consequences of trade and human development: a case of 8 BRIC countries. Atmos Pollut Res 7(6):980–989Google Scholar
  82. Sinha A, Shahbaz M, Balsalobre D (2017) Exploring the relationship between energy usage segregation and environmental degradation in N-11 countries. J Clean Prod 168:1217–1229Google Scholar
  83. Śmiech S, Papież M (2014) Energy consumption and economic growth in the light of meeting the targets of energy policy in the EU: the bootstrap panel Granger causality approach. Energy Policy 71:118–129Google Scholar
  84. Strojkoski V, Kocarev L (2017) The relationship between growth and economic complexity: evidence from Southeastern and Central Europe, MPRA, No. 77837Google Scholar
  85. Sulaiman J, Azman A, Saboori B (2013) Evidence of the environmental Kuznets curve: implications of industrial trade data. Am J Environ Sci 9(2):130–141Google Scholar
  86. Sweet CM, Maggio DSE (2015) Do stronger intellectual propert rights increase innovation. World Dev 66:665–677Google Scholar
  87. Yin J, Zheng M, Chen J (2015) The effects of environmental regulation and technical progress on CO2 Kuznets curve: an evidence from China. Energy Policy 77:97–108Google Scholar
  88. York R, Rosa EA, Dietz T (2003) STIRPAT, IPAT and ImPACT: analytic tools for unpacking the driving forces of environmental impacts. Ecol Econ 46(3):351–365Google Scholar
  89. Zaman K, Shahbaz M, Loganathan N, Raza SA (2016) Tourism development, energy consumption and Environmental Kuznets Curve: trivariate analysis in the panel of developed and developing countries. Tour Manag 54:275–283Google Scholar
  90. Zhang YJ, Jin YL, Chevallier J, Shen B (2016) The effect of corruption on carbon dioxide emissions in APEC countries: a panel quantile regression analysis. Technol Forecast Soc Chang 112:220–227Google Scholar
  91. Zhang S, Liu X, Bae J (2017) Does trade openness affect CO2 emissions: evidence from ten newly industrialized countries? Environ Sci Pollut Res 24(21):17616–17625Google Scholar
  92. Zhu S, Li R (2016) Economic complexity, human capital and economic growth: empirical research based on cross-country panel data. Appl Econ 49(38):3815–3828Google Scholar
  93. Zhu H, Duan L, Guo Y, Yu K (2016) The effects of FDI, economic growth and energy consumption on carbon emissions in ASEAN-5: evidence from panel quantile regression. Econ Model 58:237–248Google Scholar

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Suleyman Demirel UniversityIspartaTurkey
  2. 2.Faculty of Economics and Accounting, South Tehran BranchIslamic Azad UniversityTehranIran
  3. 3.Hakkari UniversityHakkâriTurkey

Personalised recommendations