Examining the environmental aspect of economic complexity outlook and environmental-related technologies in the Nordic states

Abstract

Understanding the outlook of countries’ economic complexity is vital for assessing the future of industries’ product characterization. It provides opportunity and insight on how to mitigate the negative externalities that arises from the increasing pressure on the ecosystem. Based on this account, the effect of economic complexity and the corresponding outlook on environmental degradation vis-a-vis greenhouse gas (GHG) emissions alongside other environmental indicators are examined for the panel of Denmark, Finland, Norway, and Sweden for the period 1995 to 2020. After employing Driscoll- Kraay’s standard errors for random effect (RE) with individual effects for the examination, the results indicate that the region’s level of economic complexity favors environmental sustainability. Contrarily, the economic complexity outlook spurs GHG emissions, thus suggesting that future performance of the region’s economic complexity could be detrimental to its ecosystem. Another similar, and undesirable observation is that the increase in urban population hampers environmental quality as it causes a surge in GHG emissions. Meanwhile, the results then conclude that economic growth, economic complexity, and environmental-related technologies are found to be potent drivers of environmental sustainability as the indicators exert negative pressure on GHG emissions in the Nordic region. Important policies that potentially guide immediate, and future sector-wide activities toward enhancing the region’s sustainable development programs are posited through the study outcome.