Quantile estimation of ecological footprint and economic complexity in emerging economies: The moderating role of increasing energy consumption

There are increasing debates on the relationship between economic complexity and environmental degradation. This study deepens our understanding of this nexus in 11 emerging economies given the moderating role of energy consumption while controlling for economic development, trade openness and population growth. The findings from the quantile regression technique reveal that emerging economies are characteristic of low energy consumption, leading to insignificant contributions of economic complexity to environmental degradation across the spectrum as they also have very low-trade openness. Further results show the invalidity of the EKC between energy use (such as fossil fuels) and environmental degradation in emerging economies. Moreover, the Environmental Kuznets Curve (EKC) between economic development and environmental degradation is valid especially for those countries in the low and median quantiles (Egypt, Indonesia, and Vietnam). Also, the EKC hypothesis between population and environmental degradation is valid only for countries in the high and highest quantiles (Korea Republic, Turkey, Mexico and Iran). Finally, the results revealed that trade openness strictly reduces environmental degradation across the spectrum. Policy implications, limitations of the study and direction for future research are discussed.

Automated summary

This study examines the relationship between economic complexity and environmental degradation in 11 emerging economies, considering the moderating role of energy consumption. The findings suggest that economic complexity has insignificant contributions to environmental degradation in emerging economies due to their low energy consumption and trade openness. Furthermore, the study validates the Environmental Kuznets Curve (EKC) between economic development and environmental degradation for certain quantiles, as well as the EKC hypothesis between population and environmental degradation for specific quantiles. Trade openness is also found to reduce environmental degradation across the spectrum.