SavedAdd your journal

Journals / Adam Akademi Sosyal Bilimler Dergisi / 2026 / Cilt: 16 Sayı: 1

The Relationship of Economic Complexity and Environment: Empirical Analysis of Emerging Market Economies

Ekonomik Karmaşıklık ve Çevre İlişkisi: Yükselen Piyasa Ekonomileri Üzerine Ampirik Analiz

Asim Kar, Osman Varol, Şevket Pazarcı

Pages
51–74
Publication Date
2026-05-14
🏛️Bibliographic metadata and full text access for this article are provided via DergiPark.
DergiPark Record ↗

Abstract

The relationship between economic growth and environmental pollution is theoretically based on the Environmental Kuznets Curve (EKC) hypothesis. The main purpose of this study is to examine the effects of economic complexity and renewable energy consumption on carbon (CO2) emissions for 19 emerging market economies with annual data during the 1995-2018 period, using panel data econometrics within the scope of the EKC hypothesis. In this respect, the study differs from the literature. In the empirical research, considering the developments in the panel data literature, the second-generation panel cointegration test introduced by Westerlund (2008) and the second-generation DOLSMG panel cointegration estimator proposed by Pedroni (2001) were used. In the empirical analysis using CO2 emission as an environmental pollution indicator, a cointegration relationship was found. The DOLSMG panel cointegration estimator shows that the inverted U-shaped EKC hypothesis is valid when considering CO2 emissions as an environmental pollution indicator for emerging market economies. In addition, findings were obtained from the analysis that increases in economic complexity and renewable energy consumption reduce CO2 emissions. The results imply that emerging market economies have a more sophisticated export structure, in other words increasing of economic complexity, and the widespread adoption of renewable energy consumption play an important role in reducing environmental pollution.

Özet

Ekonomik büyüme ile çevre kirliliği arasındaki ilişki teorik olarak Çevresel Kuznets Eğrisi (ÇKE) hipotezine dayandırılmaktadır. Bu çalışmanın temel amacı, 1995-2018 dönemi boyunca yıllık verilerle 19 yükselen piyasa ekonomisi için ekonomik karmaşıklığın ve yenilebilir enerji tüketiminin karbon (CO2) emisyonu üzerindeki etkilerini ÇKE hipotezi kapsamında panel veri ekonometrisiyle incelemektir. Çalışma bu yönüyle literatürden farklılaşmaktadır. Ampirik araştırmada, panel veri literatüründeki gelişmeler dikkate alınarak Westerlund (2008) tarafından ortaya konulan ikinci nesil panel eşbütünleşme testi ile Pedroni (2001) tarafından ileri sürülen ikinci nesil DOLSMG panel eşbütünleşme tahmincisinden yararlanılmıştır. Çevre kirliliği göstergesi olarak CO2 emisyonunun kullanıldığı ampirik analizde, eşbütünleşme ilişkisi bulunmuştur. DOLSMG panel eşbütünleşme tahmincisi, yükselen piyasa ekonomileri için bir çevre kirliliği göstergesi olarak CO2 emisyonu dikkate alındığında, ters U şeklindeki ÇKE hipotezinin geçerli olduğunu göstermektedir. Ayrıca analizden, ekonomik karmaşıklıktaki ve yenilenebilir enerji tüketimindeki artışların CO2 emisyonunu azalttığı yönünde bulgular elde edilmiştir. Sonuç olarak, yükselen piyasa ekonomilerinin daha sofistike bir ihracat yapısına sahip olması, diğer bir deyişle ekonomik karmaşıklığın artması ve yenilenebilir enerji tüketiminin yaygınlaşması çevre kirliliğini azaltmada önemli bir rol oynamaktadır.

Keywords
🔖

Cite This Article

Kar, A., Varol, O., Pazarcı, Ş. (2026). The Relationship of Economic Complexity and Environment: Empirical Analysis of Emerging Market Economies. Adam Akademi Sosyal Bilimler Dergisi, Cilt: 16 Sayı: 1, 51–74. https://doi.org/10.31679/adamakademi.1555167

📄 Full Text PDF Viewer

References (39)

  1. Atlas of Economic Complexity (2023), https://atlas.cid.harvard.edu/rankings (Erişim tarihi: 11.01.2023)
  2. Balsalobre-Lorente, D., Ibáñez-Luzón, L., Usman, M., & Shahbaz, M. (2022). The environmental Kuznets curve, based on the economic complexity, and the pollution haven hypothesis in PIIGS countries. Renewable Energy, 185, 1441-1455. https://doi.org/10.1016/j.renene.2021.10.059
  3. Bashir, M. F., Benjiang, M. A., Hussain, H. I., Shahbaz, M., Koca, K., & Shahzadi, I. (2022). Evaluating environmental commitments to COP21 and the role of economic complexity, renewable energy, financial development, urbanization, and energy innovation: empirical evidence from the RCEP countries. Renewable Energy, 184, 541-550. https://doi.org/10.1016/j.renene.2021.11.102
  4. Bilgili, F., Koçak, E., & Bulut, Ü. (2016). The dynamic impact of renewable energy consumption on CO2 emissions: a revisited Environmental Kuznets Curve approach. Renewable and Sustainable Energy Reviews, 54, 838-845. https://doi.org/10.1016/j.rser.2015.10.080
  5. 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
  6. 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
  7. Chu, L. K., & Le, N. T. M. (2022). Environmental quality and the role of economic policy uncertainty, economic complexity, renewable energy, and energy intensity: the case of G7 countries. Environmental Science and Pollution Research, 29(2), 2866-2882. https://doi.org/10.1007/s11356-021-15666-9.
  8. Chu, L. K., Doğan, B., Abakah, E. J. A., Ghosh, S., & Albeni, M. (2023). Impact of economic policy uncertainty, geopolitical risk, and economic complexity on carbon emissions and ecological footprint: an investigation of the E7 countries. Environmental Science and Pollution Research, 30(12), 34406-34427. https://doi.org/10.1007/%20s11356-022-24682-2
  9. Cole, M. A., Rayner, A. J., & Bates, J. M. (1997). The environmental Kuznets curve: an empirical analysis. Environment and Development Economics, 2(4), 401-416. https://doi.org/10.1017/S1355770X97000211
  10. Dinda, S. (2004). Environmental Kuznets curve hypothesis: a survey, Ecological Economics, 49(4), 431-455. https://doi.org/10.1016/j.ecolecon.2004.02.011
  11. Doğan, B., Balsalobre-Lorente, D., & Nasir, M. A. (2020). European commitment to COP21 and the role of energy consumption, FDI, trade and economic complexity in sustaining economic growth. Journal of Environmental Management, 273, 111146. https://doi.org/10.1016/j.jenvman.2020.111146
  12. Doğan, B., Driha, O. M., Balsalobre Lorente, D., & Shahzad, U. (2021). The mitigating effects of economic complexity and renewable energy on carbon emissions in developed countries. Sustainable Development, 29(1), 1-12. https://doi.org/10.1002/sd.2125
  13. 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, 31900-31912. https://doi.org/%2010.1007/s11356-019-06333-1
  14. Dünya Bankası (The World Bank), Dünya Kalkınma İstatistikleri, https://data.worldbank.org/, (Erişim tarihi: 11.01.2023)
  15. Grossman, G. M., & Krueger, A. B. (1991). Environmental impacts of a North American free trade agreement. NBER Working Paper No: 3914.
  16. Hassan, S. T., Batool, B., Wang, P., Zhu, B., & Sadiq, M. (2023). Impact of economic complexity index, globalization, and nuclear energy consumption on ecological footprint: First insights in OECD context. Energy, 263, 125628. https://doi.org/10.1016/j.energy.2022.125628
  17. Hausmann, R., Hidalgo, C. A., Bustos, S., Coscia, M., & Simoes, A. (2013). The atlas of economic complexity: Mapping paths to prosperity. MIT Press.
  18. Hidalgo, C. A., & Hausmann, R. (2009). The building blocks of economic complexity. Proceedings of the National Academy of Science, 106(26), 10570-10575.
  19. Kirikkaleli, D., Sofuoğlu, E., Abbasi, K. R., & Addai, K. (2023). Economic complexity and environmental sustainability in eastern European economy: Evidence from novel Fourier approach. Regional Sustainability, 4(4), 349-358. https://doi.org/10.1016/j.regsus.2023.08.003
  20. Kuznets, S. (1955). Economic growth and income inequality. The American Economic Review, 45(1), 1-28.
  21. Lapatinas, A., Garas, A., Boleti, E., & Kyriakou, A. (2019). Economic complexity and environmental performance: Evidence from a world sample. MPRA Paper No: 92833.
  22. Murshed, M., Saboori, B., Madaleno, M., Wang, H., & Doğan, B. (2022). Exploring the nexuses between nuclear energy, renewable energy, and carbon dioxide emissions: the role of economic complexity in the G7 countries. Renewable Energy, 190, 664-674. https://doi.org/10.1016/j.renene.2022.03.121
  23. 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 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
  24. Onafowora, O. A. & Owoye, O. (2014). Bounds testing approach to analysis of the environment Kuznets curve hypothesis. Energy Economics, 44, 47-62. https://doi.org/10.1016/j.eneco.2014.03.025 Panayotou, T. (1993). Empirical tests and policy analysis of environmental degradation at different stages of economic development. International Labour Office, WEP, 2-22/WP. 238.
  25. Pata, U. K. (2021). Renewable and non-renewable energy consumption, economic complexity, CO2 emissions, and ecological footprint in the USA: testing the EKC hypothesis with a structural break. Environmental Science and Pollution Research, 28, 846-861. https://doi.org/10.1007/s11356-020-10446-3
  26. Pedroni, P. (2001). Purchasing power parity tests in cointegrated panels. Review of Economics and Statistics, 83(4), 727-731. https://doi.org/10.1162/003465301753237803
  27. Pesaran, H, M. (2004). General Diagnostic Tests for Cross Section Dependence in Panels. Working Paper, No: 0435, University of Cambridge.
  28. Pesaran, M. H. (2007). A simple panel unit root test in the presence of cross‐section dependence. Journal of Applied Econometrics, 22(2), 265-312. https://doi.org/10.1002/jae.951
  29. Rafei, M., Esmaeili, P. & Balsalobre-Lorente, D. (2022). A step towards environmental mitigation: How do economic complexity and natural resources matter? Focusing on different institutional quality level countries. Resources Policy, 78, 102848. https://doi.org/10.1016/j.resourpol.2022.102848
  30. Saud, S., Haseeb, A., Zafar, M. W. & Li, H. (2023). Articulating natural resource abundance, economic complexity, education and environmental sustainability in MENA countries: Evidence from advanced panel estimation. Resources Policy, 80, 103261. https://doi.org/10.1016/j.resourpol.2022.103261
  31. Shahbaz, M., Ozturk, I., Afza, T. & Ali, A. (2013). Revisiting the environmental Kuznets curve in a global economy. Renewable and Sustainable Energy Reviews, 25, 494-502. https://doi.org/10.1016/j.rser.2013.05.021
  32. Stern, D. I. (2004). The rise and fall of the environmental Kuznets curve. World Development, 32(8), 1419-1439. https://doi.org/10.1016/j.worlddev.2004.03.004
  33. Sun, Y., Bao, Q., Siao-Yun, W., ul Islam, M. & Razzaq, A. (2022). Renewable energy transition and environmental sustainability through economic complexity in BRICS countries: fresh insights from novel Method of Moments Quantile regression. Renewable Energy, 184, 1165-1176. https://doi.org/10.1016/j.renene.2021.12.003
  34. Swamy, P. A. (1970). Efficient inference in a random coefficient regression model. Econometrica: Journal of the Econometric Society, 311-323. https://doi.org/10.2307/1913012
  35. Swart, J. & Brinkmann, L. (2020). Economic complexity and the environment: Evidence from Brazil. In Universities and sustainable communities: meeting the goals of the agenda 2030. Springer International Publishing. 3-45.
  36. Westerlund, J. (2008). Panel cointegration tests of the Fisher effect. Journal of Applied Econometrics, 23(2), 193-233. https://doi.org/10.1002/jae.967
  37. World Bank. (2024). World Development Report 2024: The Middle-Income Trap. Washington, DC: World Bank. License: Creative Commons Attribution CC BY 3.0 IGO. DOI: 10.1596/978-1-4648-2078-6.
  38. Yandle, B., Bhattarai, M. & Vijayaraghavan, M. (2004). Environmental Kuznets Curves: a review of findings, methods, and policy implications. PERC Research Study 02-1 update. IWMI Research Reports, (H044740).
  39. Yilanci, V. & Pata, U. K. (2020). Investigating the EKC hypothesis for China: the role of economic complexity on ecological footprint, Environmental Science and Pollution Research, 27(26), 32683-32694. https://doi.org/10.1007/s11356-020-09434-4.