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In this paper, we analyze the relationship between economic complexity and environmental performance using annual data on 88 developed and developing countries for the period of 2002–2012. We use the Economic Complexity Index, which links a country’s productive structure with the amount of knowledge and know-how embodied in the goods it produces, and the Environmental Performance Index as a measure of environmental performance. We show that moving to higher levels of economic complexity leads to better overall environmental performance, which means that sophistication of exported products does not induce environmental degradation. Nevertheless, we find that the effect of economic complexity on air quality is negative, i.e., exposure to PM2.5, CO$$_2$$ 2 , methane and nitrous oxide emissions increases, and these findings are robust across alternative econometric specifications.

Backed by strong empirical results, obtained from several different specification and sensitivity analyses, this paper contends that countries with high-intellectual quotient populations produce and export more sophisticated/complex products. This result is further reinforced by the quality of democracy.

Taxation policies can explain the differences in countries’ capacity to produce and export more sophisticated products. We develop a theoretical model considering elements from standard models of economic growth to highlight that a country’s productive structure is implied by the appropriate fiscal policy that is necessary for the development of sophisticated products. We show that economies that rely less on capital relative to labor taxation tend to produce more complex products, while countries that rely more heavily on capital relative to labor taxation produce simple products. These relationships remain robust across alternative econometric specifications. Furthermore, we demonstrate the differential effect of a country’s level of economic development on the nexus between the structure of taxation and economic sophistication. We show that the negative impact of capital taxes on economic sophistication becomes stronger for countries that are more developed.

This paper analyses the impact of economic complexity on the labour market using annual data on OECD countries for the period 1985-2008 and averaged data over the period 1990-2010 for 70 developed and developing countries with a large number of controls. We show that moving to higher levels of economic sophistication of exported goods leads to less unemployment and more employment, revealing that economic complexity does not induce job loss. Our findings remain robust across alternative econometric specifications. Furthermore, we place the spotlight on the link between products' embodied knowledge (sophistication) and labour market outcomes at the micro-level. We build a product-level index that attaches a product to the average level of unemployment (or employment) in the countries that export it. With this index, we illustrate how the development of sophisticated products is associated with changes in the labour market and show that the economic sophistication of exported goods captures information about the economy's job creation and destruction.

This paper seeks to examine the effect of income inequality on the structure of tax policies. We first use a simplified theoretical framework which allows us to formalize the testable implications of the relevant literature. Subsequently, our analysis indicates that more unequal economies rely heavier on capital relative to labor income taxation. This relationship remains robust across various alternative measures of income inequality and most importantly through alternative political regimes. In addition, our analysis places the spotlight on the potential reverse causality between income inequality and structure of the tax policies and seeks to address it by making use of the most appropriate data and techniques. JEL: H10, H23, H26

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We explore the relationship between human migration and OECD's Foreign Direct Investment (FDI) using a gravity equation enriched with variables that account for complex-network effects.Based on a panel data analysis, we find a strong positive correlation between the migration network and the FDI network, which can be mostly explained by countries' economic/demographic sizes and geographical distance. We highlight the existence of a stronger positive FDI relationship in pairs of countries that are more central in the migration network. Both intensive and extensive forms of centrality are FDI enhancing. Illuminating this result, we show that bilateral FDI between any two countries is further affected positively by the complex web of 'third party' corridors/migration stocks of the international migration network. Our findings are consistent whether we consider bilateral FDI and bilateral migration figures, or we focus on the outward FDI and the respective inward migration of the OECD countries.