Multidimensional economic complexity and inclusive green growth

Abstract

To achieve inclusive green growth, countries need to consider a multiplicity of economic, social, and environmental factors. These are often captured by metrics of economic complexity derived from the geography of trade, thus missing key information on innovative activities. To bridge this gap, we combine trade data with data on patent applications and research publications to build models that significantly and robustly improve the ability of economic complexity metrics to explain international variations in inclusive green growth. We show that measures of complexity built on trade and patent data combine to explain future economic growth and income inequality and that countries that score high in all three metrics tend to exhibit lower emission intensities. These findings illustrate how the geography of trade, technology, and research combine to explain inclusive green growth.

Estimating digital product trade through corporate revenue data

“…Finally, we use our dataset to correct estimates of economic complexity. These are measures of the knowledge intensity of economic structures that are used frequently in economic development studies because of their ability to explain international variations in economic growth, inequality, and emissions 29 – 32 . The idea is that economies engaged in more sophisticated activities can pay higher wages, produce more output per unit of emissions 27 , 47 , and distribute their income more evenly 74 .…”

“…The idea is that economies engaged in more sophisticated activities can pay higher wages, produce more output per unit of emissions 27 , 47 , and distribute their income more evenly 74 . While there has been progress in the development of multidimensional approaches to economic complexity 32 , as of today, the most widely used metrics rely on physical exports data, and thus, miss key information about digital activities.…”

Economic complexity and the sustainability transition: a review of data, methods, and literature

“…While most of the empirical literature reviewed in this section relies on exported products data, the trade dimension is not the only relevant aspect in terms of environmental sustainability. As shown by Stojkoski et al (2023), the CO 2 intensity across countries is explained more fully by a combination of trade, technological, and scientific complexity, computed respectively using data on exported products, patent applications, and scientific publications. Moreover, the authors show that not all complexity algorithms work equally well in predicting CO 2 intensity, showing that the Fitness algorithm (Tacchella et al 2012) outperforms competing measures.…”

Digital Transformation and Green Development Research: Microscopic Evidence from China’s Listed Construction Companies

“…Green innovation is a crucial resource and intermediate link in the green development of companies [22]. Patent applications are easily linked to economic growth, and the complexity of technology and R&D is also negatively correlated with carbon intensity [23]. Therefore, companies, active practitioners of green development, significantly reduce environmental pollution and create higher economic benefits through research and development innovations [24].…”