From complexity to resilience: clean innovation reshapes the load capacity curve dynamics

While the environmental implications of economic complexity and clean technology innovations have been individually addressed across various empirical contexts, their joint dynamics in fostering ecological resilience, specifically with the advanced economies, remain analytically unsettled. In this context, by farming the analysis within the Load Capacity Curve (LCC) hypothesis, the study assessed the direct impacts of economic prosperousness, economic complexity, clean technology innovation, financial advancement, and dirty, and clean energy on the ecological resilience. Notably, the objective of the study is to analyze the moderating effect of clean technology innovations in the economic complexity-ecological resilience relationship, considering the Group of Seven (G7) economies over the 1995-2020 period. The findings of the Method of Moments Quantile Regression and Fully Modified Ordinary Least Squares validated the LCC hypothesis. While economic complexity and reliance on dirty energy are associated with ecological degradation, clean energy, financial advancement, and clean innovation show resilience-enhancing effects. Importantly, the positive coefficient of the clean innovation-economic complexity interaction term elucidates that the innovation pattern facilitates a shift toward eco-sustainable economic sophistication. Hence, G7 economies are advised to encourage investments in sophisticated clean technologies like resource-efficient manufacturing processes to counteract the ecological aftermath of complex production.