Can Increasing Economic Complexity Improve China's Green Development Efficiency?

Economic complexity reflects an economy’s ability to allocate resources, use factors of production and knowledge, and expand industrial chain. It may affect green development efficiency (GDE) in the economy through specific mechanisms. In the context of China’s continuous promotion of green development, this paper aims to examine whether increasing economic complexity can improve its GDE. This paper calculates the economic complexity index (ECI) of China’s provinces using the method of reflections and data for registered firms, estimates the GDE of provinces using the data envelopment analysis window model, and for the first time, examines the impact of ECI on China’s GDE and its influence mechanism based on the panel data model and mediating effect model. Four conclusions are obtained as follows. First, the ECI of China’s provinces shows obvious spatial differences and decreases from east to west, and the temporal trends in provincial ECI are significantly different. Second, China’s GDE in 2004-2018 experiences a decline first and then a fluctuating rise, and shows the characteristics of “higher GDE in the east and south and lower GDE in the west and north”. Third, the empirical results show that ECI has a significant positive impact on GDE, and the results of the robustness tests support this finding. This indicates that increasing economic complexity plays an important role in promoting the green development of China’s provinces. Fourth, the estimation results of the mediating effect model indicate that increasing economic complexity can improve the GDE by enhancing the innovation level and human capital level