Economic Complexity and Ecological Footprint: Evidence from the Most Complex Economies in the World
2020
Olimpia Neagu
The paper introduces economic complexity as an explanatory variable of ecological footprint change, along with income per capita and fossil fuel energy consumption. The link between the ecological footprint and economic complexity is explored within a panel of 48 complex economies over the period 1995–2014. The panel analysis is based on the annual data series of the economic complexity index (ECI), fossil fuel energy consumption, income per capita, and the ecological footprint of production. The econometrical analysis, based on second-generation unit root tests, cointegration testing, and estimation of fully modified ordinary square (FMOLS) and dynamic ordinary least square (DOLS) models in a heterogeneous panel of countries, revealed a validated positive long-run association between the ecological footprint of production as dependent variable and the economic complexity index, gross domestic product per capita, and fossil fuel energy consumption. The paper sheds light on the critical situation of environmental sustainability, taking into consideration that 75% of countries under examination are in ecological deficit.
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