Environmental policy and green export competitiveness: The enhancing effect of economic complexity

Development depends on a nation’s ability to produce sophisticated goods, making economic complexity crucial. Considered as an ecological sophistication of technological, social, and cultural factors, ecological structural change, the core of Green New Developmentalism, can address environmental and socio-economic challenges, particularly in developing countries. As green policies can act as drivers of structural changes, eco-innovations, and international green competitiveness, this paper examines the impact of green policies on green export competitiveness, testing the strictly strong version of the Porter hypothesis and evaluating the moderating effect of economic complexity and pollution intensity. This paper used a panel dataset covering 40 OECD countries from 1990 to 2016, and the results indicate that stringent environmental regulations positively impact green exports only in the medium term. When the moderating factors are introduced, stringent green policies become effective in the short term, and their positive impact increases with the country’s economic complexity and pollution intensity. Combining stringent environmental policies and green economic sophistication could allow for integrating economic growth, sustainable production, and international green competitiveness.