Description
This paper investigates whether and how economic complexity influences deforestation patterns in the Brazilian Amazon. Using municipal-level panel data from 2006 to 2024, we analyse correlations among the Economic Complexity Index, average income, and deforestation indicators across Brazilian biomes. We observe a significant pattern: Amazon municipalities with high deforestation activity but an average extent of deforestation — which we refer to as deforestation frontiers — tend to have higher ECI values and income levels than both low- and high-deforestation areas. This indicates that, in deforestation frontiers, there are short-term increases in complexity and prosperity, which decline once environmental degradation passes a critical threshold. This dynamic is consistent with ‘boom-and-bust’ development cycles. By examining the link between productive diversification and environmental degradation, the paper offers new insights into how regional development pathways in deforestation frontiers can sustain environmental and economic vulnerability despite apparent advances in economic complexity.
