Effect of Economic Complexity on CO2 Emission: a Selection of Shanghai Cooperation Organization Member Countries.

The composition of commodities that are produced by a country is a key factor for its environmental performance. High economic complexity implies the transition from a lowly productive agricultural economy to highly productive sectors and the production of more sophisticated commodities. This transition needs an increased level of energy consumption, which in turn entails an increased level of CO2 emission and environmental degradation. The present research aims to explore the effect of economic complexity on CO2 emission in some Shanghai Cooperation Organization (SCO) member countries using the GMM method. According to the results, CO2 emission in these countries is affected by the variables of economic complexity, industry, human capital, and population growth rate negatively and significantly and by the variable of energy consumption positively and significantly. Also, the variables of trade openness and economic growth rate have negative but insignificant effects on CO2 emission in these countries. It is also found that economic complexity in these countries will significantly reduce CO2 emission in the long run. [ABSTRACT FROM AUTHOR]