Globalization, Renewable Energy, and Carbon Emissions in South Asia, 1996–2020: The Role of Economic Complexity

ABSTRACT

South Asia is highly vulnerable to climate change, yet the determinants of carbon emissions remain underexplored. This study estimates the short‐ and long‐run effects of economic complexity, globalization, and renewable energy consumption on carbon emissions across Bangladesh, India, Pakistan, and Sri Lanka from 1996 to 2020 and the moderating role of economic complexity in this relationship. By employing the cross‐sectional autoregressive distributed lag (CS‐ARDL) estimation technique, this study addresses cross‐sectional dependence, structural breaks, and cointegration among the variables. The findings of this study highlight that economic complexity and renewable energy consumption reduce carbon emissions, whereas globalization increases them. Notably, economic complexity significantly strengthens the adverse effects of globalization on carbon emissions rather than mitigating them, whereas its interaction with renewable energy consumption remains insignificant in enhancing the emission‐reduction effects of renewable energy. The robust results also highlight that the interaction between economic complexity and primary energy consumption positively affects carbon emissions. This study contributes to the literature by evaluating the conditioning role of economic complexity in the carbon emissions effects of globalization and renewable energy and providing evidence that supports new insights into the pollution haven hypothesis. This study concludes that a well‐designed policy framework is required to integrate renewable energy and advanced technologies into the increasing complex production structure while ensuring that globalization‐led growth does not intensify carbon emissions.