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Published on: October 21, 2016
Does economic complexity lead to global carbon emissions convergence?
Jabir Ali1, Vaseem Akram2, Muqbil Burhan2
1Indian Institute of Management Jammu, Old University Campus, Canal Road, 180016, Jammu and Kashmir, India. jabirali@iimj.ac.in.
Economic complexity drives per capita CO2 emissions convergence in country clubs, with varying impacts across groups. Tailored environmental policies targeting economic complexity can improve air quality.
Area of Science:
- Environmental Economics
- Econometrics
- Sustainable Development
Background:
- Global CO2 emissions exhibit divergence without considering country-specific development paths.
- Economic complexity, human capital, productivity, FDI, and trade openness are key determinants of emissions.
Purpose of the Study:
- To investigate club convergence in per capita CO2 emissions (PCO2Es) for 42 countries (1998-2019).
- To analyze the role of economic complexity in PCO2Es convergence across different country clubs.
- To inform club-specific environmental policy design.
Main Methods:
- Phillips and Sul club convergence approach to identify distinct country groups.
- Panel data models to assess the impact of economic complexity on PCO2Es within each club.
Main Results:
- Three distinct country clubs with unique transition paths were identified, indicating convergence.
- Economic complexity significantly influences PCO2Es, with varied effects across clubs.
- Clubs 1 and 2 (high/moderate PCO2Es) show a positive relationship, implying environmental degradation; Club 3 shows a negative relationship, indicating environmental improvement.
Conclusions:
- Club-level analysis reveals convergence in PCO2Es, challenging the overall divergence finding.
- Economic complexity is a critical policy lever for managing PCO2Es at the club level.
- Club 1 and 2 countries can enhance environmental quality by adopting successful strategies from Club 3.
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