Examining the dynamic synthesis between environmental quality, economic globalization, and economic complexity in OECD countries

Achieving better environmental quality and reducing carbon dioxide (CO2) emissions are major challenges for both developing and developed countries. Previous studies have suggested that economic growth, facilitated by economic complexity and globalization, plays a significant role in poor environmental quality. Therefore, this study aims to examine the dynamic interplay between environmental quality, economic globalization, and economic complexity in the OECD economies from 1970 to 2015. Additionally, the study investigates the influence of control variables such as institutional quality, industrialization and energy consumption on CO2 emissions and emission intensity, using panel dynamic generalized method of moment (GMM) and bootstrapping quantile regression model. The stochastic impacts by regression on population, affluence, and technology (STIRPAT) framework were employed to establish the relationships. The findings show that economic globalization and economic complexity can enhance environmental quality by reducing CO2 emissions and emission intensity globally. Economic globalization reduces the impact of CO2 emissions in the lower and upper quantile groups, while significantly increasing in the middle quantile group. Moreover, the study supports the environmental Kuznets curve hypothesis. Better institutional quality and eco-friendly industries are potential policy suggestions for reducing the ecological footprint in developed economies.