Nonlinear dynamics of environmental performance in Asia: The role of economic complexity, renewable energy, and green technologies

Abstract

The increasing environmental issues stemming from unsustainable practices highlight the necessity to assess and enhance global environmental performance. This research explored the factors influencing environmental performance (EPI) in 25 Asian countries from 2000 to 2022. Firstly, EPI was computed using indicators related to climate change, ecosystem vitality, and environmental health. Then, using a panel ARDL, the factors affecting the EPI were examined in two countries: total selected Asian countries and developing Asian countries. The components included the Economic Complexity Index (ECI), renewable energy consumption (REC), environmental technologies (ET), gross domestic product (GDP) per capita, and the Human Development Index (HDI). The findings revealed that Japan achieved the highest score on the EPI, whereas India and Pakistan received the lowest scores. Furthermore, Iran's score raises alarm due to significant challenges, especially in climate change and biodiversity. Additionally, the results rejected the Environmental Kuznets Curve (EKC) theory for all the Asian countries examined, demonstrating that the Environmental Complexity Index (ECI) is related to sustained enhancements in the Environmental Performance Index (EPI) and can support sustainability while decreasing environmental impact. However, a nonlinear relationship was discovered for developing Asian countries, supporting a variation of the EKC theory. While REC and ET are generally associated with positive short-term effects on EPI, particularly in developing countries, they can result in negative or intricate consequences in the long run. This emphasizes the critical need to adapt environmental policies to the varying developmental stages of countries, strengthen governance, and proficiently manage renewable technologies and energy through an integrated life cycle approach. Additionally, it encourages international partnerships to realize sustainable development in Asia.