The role of economic complexity in the environmental Kuznets curve of MINT economies: evidence from method of moments quantile regression

Adebayo, Tomiwa Sunday; Rjoub, Husam; Akadiri, Seyi Saint; Oladipupo, Seun Damola; Sharif, Arshian; Adeshola, Ibrahim

The role of economic complexity in the environmental Kuznets curve of MINT economies: evidence from method of moments quantile regression

2022

In the face of mounting climate change challenges, reducing emissions has emerged as a key driver of environmental sustainability and sustainable growth. Despite the fact that research has been conducted on the environmental Kuznets curve (EKC), few researchers have analyzed this in the light of economic complexity. Thus, the current research assesses the effect of economic complexity on CO₂ emissions in the MINT nations while taking into account the role of financial development, economic growth, and energy consumption for the period between 1990 and 2018. Using the novel method of moments quantile regression (MMQR) with fixed effects, an inverted U-shape interrelationship is found between economic growth and CO₂ emissions, thus validating the EKC hypothesis. Energy consumption and economic complexity increase CO₂ emissions significantly from the 1st to 9th quantiles. Furthermore, there is no significant interconnection between financial development and CO₂ emissions across all quantiles (1st to 9th). The outcomes of the causality test reveal a feedback causal connection between economic growth and CO₂, while a unidirectional causality is established from economic complexity and energy use to CO₂ emissions in the MINT nations. Based on the findings, we believe that governments should stimulate the financial sector to provide domestic credit facilities to industrialists, investors, and other business enterprises on more favorable terms so that innovative technologies for environmental protection can be implemented with other policy recommendations.

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