Volume 24, Issue 1 (2024)
QJER 2024, 24(1): 27-56 |
Back to browse issues page
Download citation:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:
Javaheri B, Ghaderi S, Ghomashi N, Amani R. Investigating the impact of economic complexity and ecological footprint on economic growth in OPEC countries. QJER 2024; 24 (1) : 2
URL: http://ecor.modares.ac.ir/article-18-68015-en.html
URL: http://ecor.modares.ac.ir/article-18-68015-en.html
1- Associate Professor of Economics, Department of Economics, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran , b.javaheri@uok.ac.ir
2- Assistant Professor of Economics, Department of Economics, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran
3- M.Sc. in Economics, Department of Economics, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran
4- Ph.D. Student in Economics, Department of Economic Development and Planning, Faculty of Management and Economics, Tarbiat Modares University, Tehran, Iran
2- Assistant Professor of Economics, Department of Economics, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran
3- M.Sc. in Economics, Department of Economics, Faculty of Humanities and Social Sciences, University of Kurdistan, Sanandaj, Iran
4- Ph.D. Student in Economics, Department of Economic Development and Planning, Faculty of Management and Economics, Tarbiat Modares University, Tehran, Iran
Abstract: (980 Views)
Economic growth is one of the most common goals in both developed and developing countries. Economic growth affects various economic and social aspects, such as poverty, welfare, unemployment, and inflation. Knowing the factors influencing economic growth is critical for developing countries. Trade of goods and services affects economic growth by increasing national income. On the other hand, nowadays, the world is facing the climate change crisis and its consequences, such as floods, landslides, earthquakes, etc., which can have negative and destructive effects on economic growth. Oil exporting countries have weak export diversity due to single-product trade and are located in the hot and dry orbit of the globe due to their geographical location. The main goal of this study is to investigate the impact of economic complexity as a symbol of international trade and ecological footprint as a symbol of climate change on economic growth in OPEC from 1995 to 2020 and using the method of generalized method of moments (GMM). The results indicate a positive and very significant effect of the economic complexity index on economic growth in oil-exporting countries. On the other hand, the ecological footprint has a negative and significant impact on economic growth in OPEC.
Introduction:
Economic growth and development are main goals in developing countries, because achieving growth and development can increase living standards, increase people's well-being, reduce the level of poverty and unemployment, and consequently strengthen the foundations of governments. Knowing the factors affecting economic growth is one of the critical goals of economic policymakers (Rahimi et al., 2020). In previous studies, much research has focused on the influence of capital, labor, and productivity on economic growth. However, less attention has been paid to other factors. Today, it is clear that export diversification, which is an essential criterion of economic complexity, has a substantial effect on economic growth. On the other hand, the world today is facing climate change, which results from destructive human activities and has very adverse effects on economic growth. Therefore, the main goal of this research is to investigate the effect of economic complexity and ecological footprint on economic growth in OPEC from 1995 to 2020 using the generalized method of moments. In this research, the effect of economic complexity on economic growth in the developing countries of the OPEC organization has been investigated for the first time. On the other hand, in this innovative research, the ecological footprint variable was used to proxy climate change.
Methodology:
There are two methods for estimating model in dynamic panel data. The basic premise of GMM is called the first-order differential method. By imposing some changes to the first-order differential GMM method, the orthogonal deviation GMM method was obtained. In this research, both one- and two-step methods have been used to prevent single effects. Two tests are proposed to ensure the appropriateness of using this method for estimating the model. Initially, the Sargan test is used to demonstrate the validity of instrumental variables. The second test includes the first-order correlation test AR (1) and the second-order AR (2).
Results and Discussion:
The economic complexity index (ECI) in all three models with fixed effects, single-stage GMM, and two-stage GMM has a positive and significant effect on economic growth in OPEC. A one-unit increase in the economic complexity index increases the economic growth of OPEC by 0.028 units in the fixed effects model, 0.032 units in the single-stage GMM, and 0.154 units in the two-stage GMM. The ecological footprint (EF) index in three mentioned models has a negative and significant effect on economic growth in OPEC. A one-unit increase in the ecological footprint index causes a decrease of -0.013 units in the model with fixed effects, -0.038 units in the single-stage GMM, and -0.087 units in the two-stage GMM. The labor force (L), as the main variables of the Solo growth model, has a positive and significant effect on economic growth in OPEC in all models. A one-unit increase in the labor force index causes economic growth by 0.029, 0.028, and 0.055 in models with fixed effects, one-stage GMM, and two-stage GMM, respectively. Gross fixed capital, which is used as capital (K) in this study, has a positive and significant effect on economic growth in OPEC in all three models. A one-unit increase in capital causes an increase in the economic growth of OPEC by 0.017 units in the model with fixed effects, 0.054 units in the single-stage GMM, and 0.163 units in the two-stage GMM, respectively. Productivity of production factors (T), which is also used as technology in some research, has a positive and significant effect on economic growth in OPEC so that a one-unit increase in productivity of production factors causes an increase in economic growth by 0.009, 0.044 and 0.072 units, respectively in the model with fixed effects, single-stage GMM and two-stage GMM.
Conclusion:
The results of the present study showed that in all three fixed effects models, one-stage GMM and two-stage GMM, the economic complexity index has a positive and significant effect on economic growth in OPEC. With the increase in economic complexity, countries' knowledge, technology, and innovation in producing various goods and services will increase. As a result, exports and economic growth will be positively affected. On the other hand, the economic complexity index, in addition to creating a positive effect on quantitative indicators, has a positive effect on qualitative indicators, including the quality of human resources, innovation, savings, and increasing productivity, which can again increase economic growth. On the other hand, in all three models of fixed effects, one-stage GMM and two-stage GMM, the ecological footprint index significantly negatively affects economic growth in OPEC. An increase in the ecological footprint index means the increase in the use of all the planet's natural resources to meet a country's needs, including food, clothing, housing, etc. With the increase in the use of land resources and in the long-term time horizon, the climate change crisis can increase. With the increase in floods, global warming, landslides, and other natural disasters, economic growth will be negatively affected.
Introduction:
Economic growth and development are main goals in developing countries, because achieving growth and development can increase living standards, increase people's well-being, reduce the level of poverty and unemployment, and consequently strengthen the foundations of governments. Knowing the factors affecting economic growth is one of the critical goals of economic policymakers (Rahimi et al., 2020). In previous studies, much research has focused on the influence of capital, labor, and productivity on economic growth. However, less attention has been paid to other factors. Today, it is clear that export diversification, which is an essential criterion of economic complexity, has a substantial effect on economic growth. On the other hand, the world today is facing climate change, which results from destructive human activities and has very adverse effects on economic growth. Therefore, the main goal of this research is to investigate the effect of economic complexity and ecological footprint on economic growth in OPEC from 1995 to 2020 using the generalized method of moments. In this research, the effect of economic complexity on economic growth in the developing countries of the OPEC organization has been investigated for the first time. On the other hand, in this innovative research, the ecological footprint variable was used to proxy climate change.
Methodology:
There are two methods for estimating model in dynamic panel data. The basic premise of GMM is called the first-order differential method. By imposing some changes to the first-order differential GMM method, the orthogonal deviation GMM method was obtained. In this research, both one- and two-step methods have been used to prevent single effects. Two tests are proposed to ensure the appropriateness of using this method for estimating the model. Initially, the Sargan test is used to demonstrate the validity of instrumental variables. The second test includes the first-order correlation test AR (1) and the second-order AR (2).
Results and Discussion:
The economic complexity index (ECI) in all three models with fixed effects, single-stage GMM, and two-stage GMM has a positive and significant effect on economic growth in OPEC. A one-unit increase in the economic complexity index increases the economic growth of OPEC by 0.028 units in the fixed effects model, 0.032 units in the single-stage GMM, and 0.154 units in the two-stage GMM. The ecological footprint (EF) index in three mentioned models has a negative and significant effect on economic growth in OPEC. A one-unit increase in the ecological footprint index causes a decrease of -0.013 units in the model with fixed effects, -0.038 units in the single-stage GMM, and -0.087 units in the two-stage GMM. The labor force (L), as the main variables of the Solo growth model, has a positive and significant effect on economic growth in OPEC in all models. A one-unit increase in the labor force index causes economic growth by 0.029, 0.028, and 0.055 in models with fixed effects, one-stage GMM, and two-stage GMM, respectively. Gross fixed capital, which is used as capital (K) in this study, has a positive and significant effect on economic growth in OPEC in all three models. A one-unit increase in capital causes an increase in the economic growth of OPEC by 0.017 units in the model with fixed effects, 0.054 units in the single-stage GMM, and 0.163 units in the two-stage GMM, respectively. Productivity of production factors (T), which is also used as technology in some research, has a positive and significant effect on economic growth in OPEC so that a one-unit increase in productivity of production factors causes an increase in economic growth by 0.009, 0.044 and 0.072 units, respectively in the model with fixed effects, single-stage GMM and two-stage GMM.
Conclusion:
The results of the present study showed that in all three fixed effects models, one-stage GMM and two-stage GMM, the economic complexity index has a positive and significant effect on economic growth in OPEC. With the increase in economic complexity, countries' knowledge, technology, and innovation in producing various goods and services will increase. As a result, exports and economic growth will be positively affected. On the other hand, the economic complexity index, in addition to creating a positive effect on quantitative indicators, has a positive effect on qualitative indicators, including the quality of human resources, innovation, savings, and increasing productivity, which can again increase economic growth. On the other hand, in all three models of fixed effects, one-stage GMM and two-stage GMM, the ecological footprint index significantly negatively affects economic growth in OPEC. An increase in the ecological footprint index means the increase in the use of all the planet's natural resources to meet a country's needs, including food, clothing, housing, etc. With the increase in the use of land resources and in the long-term time horizon, the climate change crisis can increase. With the increase in floods, global warming, landslides, and other natural disasters, economic growth will be negatively affected.
Article number: 2
Article Type: Original Research |
Subject:
Economic Development and Growth
Received: 2023/03/12 | Accepted: 2023/04/8 | Published: 2024/03/18
Received: 2023/03/12 | Accepted: 2023/04/8 | Published: 2024/03/18
Send email to the article author
| Rights and permissions | |
 |
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. |