ECONOMIC COMPLEXITY FRAMEWORK FOR SUSTAINABLE DEVELOPMENT: PRODUCTIVE STRUCTURE, INCOME DISTRIBUTION AND GREENHOUSE GAS EMISSIONS

Abstract

In development economics, economic growth and income distribution are tightly linked to the productive structure, which determines the goods produced, occupational opportunities, and the learning process and bargaining power of workers. Understanding the productive structure is also crucial when considering climate change because shifting to an economy producing "green" products using renewable energy requires its complete overhaul, altering its emissions patterns. The intricate linkages within the productive structure mean that every country, not just developing economies, faces this transformational challenge. This work develops a new framework that characterizes the complexity of the productive structure at sectoral level to assess its systemic impacts on the economic, social and environmental performance. The economic complexity literature uses complexity at product level to assess the productive structure and relate it to the long-term economic growth. This framework advances the field by 1) creating a method to quantify sectoral complexity and its relation to greenhouse gas emissions, 2) evaluating how the economic growth pattern affects the sectoral complexity and greenhouse gas emissions, and 3) examining the impact of sectoral complexity and greenhouse gas emissions on income distribution, accounting for gender and regional differences. Thus, this framework is a vital analytical tool for sustainable development, empowering researchers and policymakers to enhance a country's social, economic, and environmental dimensions.