OIDA International Journal of Sustainable Development
Open-access peer-reviewed journal
https://doi.org/10.64211/oidaijsd190809
The Impact of Geopolitical Risk, Economic Complexity, and Good Governance on the Environment, Across Countries with Different Income Levels
Yadollah Dadgar *,[1], Rouhollah Nazari [2], Fatemeh Fahimifar [3]
1 Beheshti University, Iran.
2 Ferdowsi University, Iran.
3 Allamah Tabataba’i University, Iran.
* Corresponding authour: yydadgar@gmail.com
Volume 19, Issue 08, Pg. 141-154, 2026.
Abstract: Environmental quality is considered one of the most important pillars of sustainable development and plays multiple roles in maintaining balance in human life. However, due to the absence of specific laws and regulations and the lack of clearly defined ownership, the environment is often exploited in an unlimited manner, resulting in environmental degradation and various forms of pollution. Consequently, environmental pollution has become one of the most critical challenges for all countries. Global warming and climate change, driven by extensive human activities, are among the major environmental problems that have generated significant concern in recent decades. Countries across all income groups face environmental challenges. Given the intensification of global environmental pressures and the rise in geopolitical uncertainties, understanding the interaction between the environment and geopolitical risks is of considerable policy importance. Accordingly, this article employs panel data econometric methods to examine the impact of geopolitical risk, economic complexity, and good governance on environmental outcomes across countries with different income levels (lower-middle, upper-middle, and high income) over the period 2002–2024.The findings indicate that geopolitical risk has a positive effect on environmental pollution, leading to higher levels of environmental degradation. In contrast, economic complexity and good governance exert negative effects on environmental pollutants, thereby contributing to pollution reduction. The results also suggest that the relationship between geopolitical risk and environmental degradation depends on countries’ income levels. Specifically, elevated geopolitical risk increases environmental pressure in lower(and upper-middle)income countries. This may be attributed to weaker regulatory institutions, reduced investment in clean technologies, and the prioritization of defense and military expenditures over environmental concerns. Conversely, in high-income countries, the effect of geopolitical risk on environmental pollution may be weaker, potentially due to stricter environmental regulations. Based on these findings, environmental policies should be designed in accordance with the level of development and the specific conditions of each group of countries. For lower-middle and upper-middle-income countries, managing geopolitical risks and facilitating a transition toward environmentally compatible economic complexity and good governance are essential. For high-income countries, enforcing environmental laws and sustaining investment in green innovation appear to be vital.
Keywords: Geopolitical risks; Economic complexity; Good governance; Environment in different countries.
[1] – Professor of economics, Beheshti University, Corresponding author
[2] – Ph.D. of economics, Ferdowsi University, Iran
[3] – Ph.D. of economics, Allamah Tabataba’i University, Iran
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