ECONOMIC COMPLEXITY AND ENVIRONMENT: THE CASE OF EU COUNTRIES

Öz

Environmental degradation, which is the damage to the ecosystem through the depletion of resources such as air, water and soil, is perceived as a global threat. Therefore, countries are implementing various policies to eliminate the risks of environmental degradation that threatens sustainability. In this context, determining the elements that threaten the environment is important for a sustainable environmental policy. There are many elements in the literature that have been proven to have an impact on the environment. One of these elements is economic complexity. “Economic Complexity Index (ECI)" focuses on the production capacities of countries and is considered a measure of the production capabilities of countries. This structural process, in which economies diversify into more complex industries, also has direct effects on the environment. In this context, the aim of the study is to examine the relationship between economic complexity and environmental degradation with data covering the period 1998-2020 using the fixed-effect Driscoll-Kraay method for EU countries. Empirical findings have revealed that economic complexity has a positive impact on environmental degradation. The study shows that a country's environmental performance is highly related to the mix of products it exports.

Anahtar Kelimeler

• Economic Complexity
• Environment
• Panel Data
• EU Countries

EKONOMİK KARMAŞIKLIK VE ÇEVRE: AB ÜLKELERİ ÖRNEĞİ

Öz

Hava, su, toprak gibi kaynakların tükenmesi yoluyla ekosistemin zarar görmesi olarak adlandırılan çevresel bozulma küresel bir tehdit olarak algılanmaktadır. Dolayısıyla, ülkeler sürdürülebilirliği tehdit eden çevresel bozulmanın risklerini ortadan kaldırmak için çeşitli politikalar uygulamaktadır. Bu bağlamda çevreyi tehdit eden unsurların belirlenmesi sürdürülebilir bir çevre politikası açısından önem arz etmektedir. Literatürde çevre üzerinde etkisi olduğu kanıtlanan birçok unsur bulunmaktadır. Bu unsurlardan biri de ekonomik karmaşıklıktır (economic compelexity). Ekonomik Karmaşıklık Endeksi (ECI-Economic Complexity Index) ülkelerin üretim kapasitelerine odaklanmakta ve ülkelerin üretim yeteneklerinin bir ölçütü kabul edilmektedir. Ekonomilerin daha karmaşık endüstrilere doğru çeşitlendiği bu yapısal sürecin çevre üzerinde de doğrudan etkileri bulunmaktadır. Bu bağlamda çalışmanın amacı, 1998-2020 dönemini içeren verilerle ekonomik karmaşıklık ve çevresel bozulma arasındaki ilişkinin AB ülkeleri için sabit etkili Driscoll-Kraay yöntemiyle incelenmesidir. Elde edilen ampirik bulgular, ekonomik karmaşıklığın çevresel bozulma üzerinde pozitif bir etkisi olduğunu ortaya koymuştur. Çalışma, bir ülkenin çevresel performansının ihraç ettiği ürünlerin karışımıyla yüksek düzeyde ilişkili olduğunu göstermektedir.

Anahtar Kelimeler

• Ekonomik Karmaşıklık
• Çevre
• Panel Veri
• AB Ülkeleri

Kaynakça

1. Abbasi, K. R., Lv, K., Radulescu, M., & Shaikh, P. A. (2021). Economic complexity, tourism, energy prices, and environmental degradation in the top economic complexity countries: fresh panel evidence. Environmental Science and Pollution Research, 28, 68717-68731. https://doi.org/10.1007/s11356-021-15312
2. Abdon, A., & Felipe, J. (2011). The product space: What does it say about the opportunities for growth and structural transformation of Sub-Saharan Africa?. https://dx.doi.org/10.2139/ssrn.1846734
3. Adebayo, T. S., Rjoub, H., Akadiri, S. S., Oladipupo, S. D., Sharif, A., & Adeshola, I. (2022). The role of economic complexity in the environmental Kuznets curve of MINT economies: evidence from method of moments quantile regression. Environmental Science and Pollution Research, 29(16), 24248-24260. https://doi.org/10.1007/s11356-021-17524-0
4. Alola, A. A., Celik, A., Awan, U., Abdallah, I., & Obekpa, H. O. (2023). Examining the environmental aspect of economic complexity outlook and environmental-related technologies in the Nordic states. Journal of Cleaner Production, 408, 137154. https://doi.org/10.1016/j.jclepro.2023.137154
5. Baltagi, B. H. (2014). Panel data and difference-in-differences estimation. In A. J. Culyer (Ed). Encyclopedia of Health Economics, (ss. 425-433). Elsevier.
6. Boleti, E., Garas, A., Kyriakou, A., & Lapatinas, A. (2021). Economic complexity and environmental performance: evidence from a world sample. Environmental modeling & assessment, 26(3), 251-270. https://doi.org/10.1007/s10666-021-09750-0 (online)
7. Boleti, E., Garas, A., Kyriakou, A., & Lapatinas, A. (2021). Economic complexity and environmental performance: Evidence from a world sample. Environmental modeling & assessment, 26, 251–270. https://doi.org/10.1007/s10666-021-09750-0
8. Bowen, A., & Hepburn, C. (2014). Green growth: an assessment. Oxford Review of Economic Policy, 30(3), 407-422. https://doi.org/10.1093/oxrep/gru029

9. Can, M., & Gozgor, G. (2017). The impact of economic complexity on carbon emissions: evidence from France. Environmental Science and Pollution Research, 24, 16364-16370. https://doi.org/ 10.1007/s11356-017-9219-7
10. Chu, L. K. (2021). Economic structure and environmental Kuznets curve hypothesis: new evidence from economic complexity. Applied Economics Letters, 28(7), 612-616. https://doi.org/10.1080/13504851.2020.1767280
11. Cristelli, M., Gabrielli, A., Tacchella, A., Caldarelli, G., & Pietronero, L. (2013). Measuring the intangibles: A metrics for the economic complexity of countries and products. PloS one, 8(8), e70726. https://doi.org/10.1371/journal.pone.0070726
12. Doğan, B., Saboori, B., & Can, M. (2019). Does economic complexity matter for environmental degradation? An empirical analysis for different stages of development. Environmental Science and Pollution Research, 26(31), 31900-31912. https://doi.org/10.1007/s11356-019-06333-1
13. Energy Institute (2023). Statistical Review of World Energy. https://www.energyinst.org/statistical-review/resources-and-data-downloads
14. European Comission (ty). Economic complexity and the race for industrial competitiveness. https://iri.jrc.ec.europa.eu/areas-of-work/complexity
15. European Environment Agency (EEA) (2004). Environmental impact of energy. https://www.eea.europa.eu/help/glossary/eea-glossary/environmental-impact-of-energy
16. Grossman, G. M., & Krueger, A. B. (1995). Economic growth and the environment. The quarterly journal of economics, 110(2), 353-377. https://doi.org/10.2307/2118443
17. Hausmann, R., & Hidalgo, C. A. (2011). The network structure of economic output. Journal of economic growth, 16, 309-342. https://doi.org/10.1007/s10887-011-9071-4
18. Hausmann, R., Hidalgo, C. A., Bustos, S., Coscia, M., Chung, S., Jimenez, J., et al. (2011). The atlas of economics complexity – Mapping paths to prosperity. Hollis: Puritan Press. https://doi.org/10.7551/mitpress/9647.001.0001
19. Hausmann, R., Hwang, J., & Rodrik, D. (2007). What you export matters. Journal of economic growth, 12, 1-25. https://www.jstor.org/stable/40216112
20. Hidalgo, C. A., & Hausmann, R. (2009). The building blocks of economic complexity. Proceedings of the national academy of sciences, 106(26), 10570-10575. https://doi.org/10.1073/pnas.0900943106
21. Hidalgo, C. A., Klinger, B., Barabási, A. L., & Hausmann, R. (2007). The product space conditions the development of nations. Science, 317(5837), 482-487. https://doi.org/10.1126/science.1144581
22. Kaufmann, R. K., Davidsdottir, B., Garnham, S., & Pauly, P. (1998). The determinants of atmospheric SO2 concentrations: reconsidering the environmental Kuznets curve. Ecological economics, 25(2), 209-220. 10.1016/S0921-8009(97)00181-X
23. Krieger, T., & Meierrieks, D. (2020). Population size and the size of government. European journal of political economy, 61, 101837. https://doi.org/10.1016/j.ejpoleco.2019.101837
24. Laverde-Rojas, H., & Correa, J. C. (2021). Economic complexity, economic growth, and CO2 emissions: a panel data analysis. International Economic Journal, 35(4), 411-433. DOI: https://doi.org/10.1080/10168737.2021.1975303
25. Lewis, W. A. (2013). Theory of economic growth. Routledge. https://doi.org/10.4324/9780203709665
26. Li, Z., Chen, W-T., Chang, I-C., & Hung, C-C. (2021). Dynamic relationship between air pollution and economic growth in Taiwan deduced from mathematical models. Clean – soil, air, water, 49, 2100081. https://doi.org/10.1002/clen.202100081
27. Maddala, G. S., & Wu, S. (1999). A comparative study of unit root tests with panel data and a new simple test. Oxford bulletin of economics and statistics, 61, 631-652. http://dx.doi.org/10.1111/1468-0084.61.s1.13
28. Mealy, P., & Teytelboym, A. (2022). Economic complexity and the green economy. Research Policy, 51(8), 103948. https://doi.org/10.1016/j.scs.2010.08.006
29. Mealy, P., Farmer, J. D., & Teytelboym, A. (2019). Interpreting economic complexity. Science advances, 5(1), eaau1705. https://doi.org/10.1016/j.respol.2020.103948
30. Mikayilov, J. I., Galeotti, M., & Hasanov, F. J. (2018).The impact of economic growth on CO2 emissions in Azerbaijan. Journal of cleaner production, 197(1), 1558-1572. https://doi.org/10.1016/j.jclepro.2018.06.269
31. Munasinghe, M. (1999). Is environmental degradation an inevitable consequence of economic growth: tunneling through the environmental Kuznets curve. Ecological Economics, 29(1), 89-109. https://doi.org/10.1016/S0921-8009(98)00062-7
32. Neagu, O. (2019). The link between economic complexity and carbon emissions in the European Union countries: a model based on the Environmental Kuznets Curve (EKC) approach. Sustainability, 11(17), 4753. https://doi.org/10.3390/su11174753
33. Neagu, O. (2020). Economic complexity and ecological footprint: evidence from the most complex economies in the world. Sustainability, 12(21), 9031. https://doi.org/10.3390/su12219031
34. Neagu, O., & Teodoru, M. C. (2019). The relationship between economic complexity, energy consumption structure and greenhouse gas emission: Heterogeneous panel evidence from the EU countries. Sustainability, 11(2), 497. https://doi.org/10.3390/su11020497
35. OEC [The Observatory of Economic Complexity] (2023). Economic Complexity Legacy Rankings (ECI). https://oec.world/en/rankings/country/eci/ 1
36. Rafique, M.Z., Nadeem, A.M., Xia, W., Ikram, M., Shoaib, H. M., & Shahzad, U. (2022). Does economic complexity matter for environmental sustainability? Using ecological footprint as an indicator. Environment, development and sustainability, 24, 4623–4640. https://doi.org/10.1007/s10668-021-01625-4
37. Romero, J. P., & Gramkow, C. (2021). Economic complexity and greenhouse gas emissions. World development, 139, 105317. https://doi.org/10.1016/j.worlddev.2020.105317
38. Saqib, N., Radulescu, M., Usman, M., Balsalobre-Lorente, D., & Cilan, T. (2023). Exploring the Nexus of Environmental Technology, Economic Complexity, Renewable Electricity, and Environmental Policy in G10 Countries: Implications for Sustainable Low-Carbon Future. Economic Complexity, Renewable Electricity, and Environmental Policy in G10 Countries: Implications for Sustainable Low-Carbon Future. https://doi.org/10.1016/j.heliyon.2023.e16457
39. The European Environment — State and Outlook (SOER) (2015). The changing context of European environmental policy. https://www.eea.europa.eu/soer/2015/synthesis/report/1-changingcontext
40. World Development Indicators (WDI). https://databank.worldbank.org/source/world-development-indicators
41. 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, 97-108. https://doi.org/10.1016/j.enpol.2014.11.008
42. Zhen N., & Freire, C. (2023). The interlinks between the economic complexity and carbon footprint, UNCTAD Background Paper, United Nations Conference on Trade and Development, Geneva.