The Effect of Economic Complexity and Economic Globalization on Load Capacity Index in Iran

Articles in Press

Document Type : Research Article

Authors

1 Assistant Professor, Department of Economics, Faculty of Humanities, Sanandaj Branch, Islamic Azad University, Sanandaj, Iran

2 Ph.D. Student in Economics, Department of Economics, Faculty of Social Sciences, Economics, and Entrepreneurship, Razi University, Kermanshah, Iran

Abstract

Given escalating environmental challenges and the imperative of achieving sustainable development goals, more precise assessments of a country’s environmental status are essential. This study employs the Load Capacity Factor—defined as the ratio of biocapacity to ecological footprint—to examine the impact of economic complexity and economic globalization on Iran’s environmental sustainability over the period 1995–2021. The Fully Modified Ordinary Least Squares (FMOLS) method is used for estimation. The results indicate that economic complexity and financial development have a positive and statistically significant effect on the Load Capacity Factor, while economic globalization, foreign direct investment, and non-renewable energy consumption exert a negative and significant impact. Based on these findings, a revision of the country’s economic and environmental policies through a sustainability lens is warranted. Proposed strategies include redirecting production and exports toward low-pollution products, enforcing stringent environmental regulations on foreign investment, expanding trade relations with countries upholding high environmental standards, providing financial support for green projects, and reforming energy policies to prioritize efficiency and renewable resources. Such measures can help reconcile economic development with environmental stewardship and strengthen the country’s load capacity factor.

Keywords

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References

 
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Journal of Economic Policies and Research

Articles in Press, Accepted Manuscript
Available Online from 13 January 2025

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History

  • Receive Date: 04 August 2024
  • Revise Date: 12 January 2025
  • Accept Date: 13 January 2025
  • Publish Date: 13 January 2025

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