Effects of economic complexity, economic growth, and renewable energy technology budgets on ecological footprint: the role of democratic accountability

Abstract

The economic structure of countries can infuence economic growth, energy demand, and environmental footprints. However, the literature on economic complexity and ecological footprint (EFP) nexus is scarce. Besides, democracy is an important factor that may afect environmental policies and environmental sustainability. Hence, this paper investigates the efect of democracy, economic complexity, and renewable energy technology budgets on the EFP in G7 countries controlling income and fnancial development from 1985 to 2017. The fndings from Westerlund (J Appl Econ 23:193–233, 2008) and other cointegration methods depict cointegration among variables. The long-run estimates from the continuously updated fully modifed method unfold that economic complexity contributes to reducing the EFP. However, greater democratic accountability boosts the EFP fgures rather than reducing them. On the fipside, renewable energy technology budgets and fnancial development are evidenced to mitigate EFP. Moreover, the study unveils a U-shaped linkage between economic growth and EFP, which indicates that an increase in income level will boost EFP. Further, the study found causality from economic complexity, democracy, and renewable energy budgets to EFP. Based on these fndings, it is pertinent for the G7 countries to increase the manufacturing of sophisticated and complex products. In addition, enhancing renewable energy technology budgets is essential to ensure environmental well-being.