Economic complexity and environmental sustainability: sectoral perspectives from OECD countries

This study explores the relationship between environmental pollution and sectoral economic complexity, focusing on the agricultural and industrial sectors in 35 OECD countries from 2002 to 2021. Utilizing the economic complexity index at the sectoral level, the research reveals that economic complexity significantly influences environmental pollution. Notably, this influence follows an inverted U-shaped pattern over the long term, aligning with the Environmental Kuznets Curve hypothesis. This suggests that while initial increases in economic complexity may heighten pollution, further advancements in complexity lead to the development of more efficient and cleaner technologies, ultimately reducing pollution. The findings have significant implications for policy formulation. They indicate that investments in enhancing economic complexity should be balanced with the environmental sustainability of the sectors. This balance is crucial for achieving long-term ecological and economic stability. The study highlights the need for policies that encourage innovation and technological advancement in both agricultural and industrial sectors, ensuring economic growth aligns with environmental preservation.