Economic Complexity
and the Environment: Evidence
from Brazil
Julia Swart and Lisa Brinkmann
Abstract Brazil is a heterogenous country with respect to, among others, economic
complexity, economic development and environmental quality. This paper examines the relationship between economic complexity and key environmental variables
in Brazil. We deviate from the Environmental Kuznets Curve (EKC) literature by
focusing on economic complexity instead of economic development alone to explain
cross-section and time-series variation in a range of environmental variables. Our
motivation for considering economic complexity as a main explanatory variable lies
on the consideration that low economic complexity is associated to products which
are peripheral on the product space. These are products which are less connected to
other products, limiting the opportunities for other economic activities, and therefore limiting the impact on the environment. As economic complexity increases
more opportunities are created, the product space becomes denser, and pollution
increases. However, at a high enough level of economic complexity, the structural
changes bring knowledge-intensive industries, which demands higher-skilled labour
force and wider skills of occupations. At this point, economic complexity is associated to decreasing environmental degradation. Using panel data for Brazil we find
that waste generation decreases, but forest fires increase with rising complexity.
Complexity is not associated to more deforestation or air pollution.
Keywords Economic complexity · Brazil · Environmental degradation · Solid
waste generation · Deforestation · Forest fires · Air pollution
J. Swart (B) · L. Brinkmann
Utrecht School of Economics, Utrecht University, Kriekenpitplein 21-22,
3584 EC Utrecht, The Netherlands
e-mail: j.swart@uu.nl
L. Brinkmann
e-mail: brinkmann.lisa@outlook.com
© Springer Nature Switzerland AG 2020
W. Leal Filho et al. (eds.), Universities and Sustainable Communities:
Meeting the Goals of the Agenda 2030, World Sustainability Series,
https://doi.org/10.1007/978-3-030-30306-8_1
3
and the Environment: Evidence
from Brazil
Julia Swart and Lisa Brinkmann
Abstract Brazil is a heterogenous country with respect to, among others, economic
complexity, economic development and environmental quality. This paper examines the relationship between economic complexity and key environmental variables
in Brazil. We deviate from the Environmental Kuznets Curve (EKC) literature by
focusing on economic complexity instead of economic development alone to explain
cross-section and time-series variation in a range of environmental variables. Our
motivation for considering economic complexity as a main explanatory variable lies
on the consideration that low economic complexity is associated to products which
are peripheral on the product space. These are products which are less connected to
other products, limiting the opportunities for other economic activities, and therefore limiting the impact on the environment. As economic complexity increases
more opportunities are created, the product space becomes denser, and pollution
increases. However, at a high enough level of economic complexity, the structural
changes bring knowledge-intensive industries, which demands higher-skilled labour
force and wider skills of occupations. At this point, economic complexity is associated to decreasing environmental degradation. Using panel data for Brazil we find
that waste generation decreases, but forest fires increase with rising complexity.
Complexity is not associated to more deforestation or air pollution.
Keywords Economic complexity · Brazil · Environmental degradation · Solid
waste generation · Deforestation · Forest fires · Air pollution
J. Swart (B) · L. Brinkmann
Utrecht School of Economics, Utrecht University, Kriekenpitplein 21-22,
3584 EC Utrecht, The Netherlands
e-mail: j.swart@uu.nl
L. Brinkmann
e-mail: brinkmann.lisa@outlook.com
© Springer Nature Switzerland AG 2020
W. Leal Filho et al. (eds.), Universities and Sustainable Communities:
Meeting the Goals of the Agenda 2030, World Sustainability Series,
https://doi.org/10.1007/978-3-030-30306-8_1
3