Economic Complexity and the Green Economy

53 Pages Posted: 5 Feb 2018 Last revised: 2 Feb 2019

See all articles by Penny Mealy

Penny Mealy

University of Oxford - Institute for New Economic Thinking at the Oxford Martin School; University of Oxford - Smith School of Enterprise and the Environment

Alexander Teytelboym

University of Oxford - Oxford Martin School

Date Written: December 22, 2017

Abstract

Which countries currently have the productive capabilities to thrive in the green economy? How might countries reorient their existing industrial structures to be more competitive in an environmentally friendly world? To investigate these questions, this paper develops a novel methodology for measuring productive capabilities to the green economy. By constructing a new and comprehensive dataset of traded green products and drawing on economic complexity methods, we rank countries in terms of their ability to export complex green products competitively. We show that higher ranked countries are more likely to have higher environmental patenting rates, lower CO2 emissions, and more stringent environmental policies even after controlling for per capita GDP. We then examine countries’ potential to transition into green products in the future and find strong path dependence in the accumulation of green capabilities. Our results shed new light on green industrialisation and have a number of implications for green industrial policy.

Keywords: Economic Complexity, Green Economy, Trade, Exports, Green diversification, Industrial Policy

JEL Classification: O10, O25, O44, O50, Q50, Q56, F14

Suggested Citation

Mealy, Penny and Teytelboym, Alexander, Economic Complexity and the Green Economy (December 22, 2017). Available at SSRN: https://ssrn.com/abstract=3111644 or http://dx.doi.org/10.2139/ssrn.3111644

Penny Mealy (Contact Author)

University of Oxford - Institute for New Economic Thinking at the Oxford Martin School ( email )

Eagle House
Walton Well Road
Oxford, OX2 6ED
United Kingdom

University of Oxford - Smith School of Enterprise and the Environment ( email )

United Kingdom

Alexander Teytelboym

University of Oxford - Oxford Martin School ( email )

University of Oxford
34 Broad Street
Oxford, OX1 3BD
United Kingdom

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