Unlocking Green Export Opportunities: Empirical Insights from Southern Cone Economies

Abstract

This paper develops a strategic framework that integrates the theoretical perspectives of evolutionary economic geography and economic complexity to identify green export opportunities. By combining feasibility factors—such as green specialization, relatedness, and trade inertia—with desirability criteria like income, equity, and low emissions, the framework offers a comprehensive approach to identify green export diversification. The empirical application, focused on the Southern Cone (Argentina, Brazil, Chile, Paraguay, and Uruguay), suggests that economies should prioritize green opportunities aligned with their existing capabilities, gradually expanding into higher-risk, higher-return options. The study provides tailored green export diversification portfolios for each country, identifying key opportunities in renewable energy products for Argentina and Brazil, lithium-related inputs for Chile, biofuels for Paraguay, and green hydrogen for Uruguay. These findings offer valuable insights for the design of public policies aimed at fostering green export diversification.

1. Introduction

The need to advance towards a sustainable model requires global efforts and the development of innovative solutions, such as the integration of technologies, goods, and services that facilitate the green transition. In this regard, international organizations have underscored the urgency of promoting the global adoption of products with a positive environmental impact and low-carbon technologies [1,2,3]. Additionally, strengthening productive capacities is considered a crucial aspect for promoting a green and inclusive economy, especially in emerging economies like those in the Southern Cone [1,4,5].

A significant step forward in the transition of these economies is the production and export of goods with environmental benefits (also referred to as green products), due to their potential to drive structural transformation and improve international competitiveness [5]. These products include a wide range of inputs and goods that utilize alternative energies, cleaner technologies, recycled materials, good practices in water use, and waste management, among others [2]. Moreover, these goods are experiencing an increase in demand, which could represent a market opportunity [6,7].

In this context, diversification towards a green economy emerges as a strategic pathway to promote development in potential harmony with environmental preservation and social equity.

It is well established that diversification strategies are closely linked to the productive structure of each country [8,9,10,11].

The literature highlights that innovations or new products are more likely to emerge in economies with a higher concentration of related products, technologies, or industries [9,12,13,14,15,16]. This concept, known as “relatedness”, suggests that when related sectors coexist within an economy, firms and workers can more easily transfer knowledge, skills, and technologies across different domains [14]. This transfer of expertise enhances the potential for innovation, as successful ideas and solutions from one sector can be adapted and applied to others, thereby fostering new opportunities for development and productive diversification.

Furthermore, an innovative application of relatedness concepts can be seen in the emergence of the economic complexity framework, initially developed by Hidalgo et al. [17] and Hidalgo and Hausmann [18]. This approach posits that the productive capacities of an economy can be inferred from data on the geographical distribution of economic activities. In the past decade, the application of economic complexity indicators has increased significantly [19], even in the context of the green transition [20,21,22,23,24].

This article finds feasible and desirable portfolios for export diversification towards environmentally beneficial products in the Southern Cone region, focusing on aspects that have been little explored together in the literature. First, existing and valuable studies on complexity-based diversification strategies analyze diversification portfolios, but they do not include a filter for green products [25,26,27,28,29,30,31,32,33,34,35,36,37,38,39,40,41]. Therefore, grounded in the theoretical framework of evolutionary economic geography and economic complexity, this study explores the following question: what feasible and desirable strategies can Southern Cone countries implement to enhance export diversification toward environmentally beneficial goods? To address this inquiry, this study contributes to the existing body of literature in two key ways: (a) by identifying feasible and desirable portfolios for green diversification within the Southern Cone region; and (b) methodologically, by incorporating a comprehensive set of factors, based on the previous literature [9,19,31,40,42], to define feasible and desirable strategies, including green specialization, trade inertia, relatedness, high-income potential, a just transition toward low emissions, and high economic complexity.

Second, unlike previous analyses of green-export diversification portfolios in developed economies as Austria [43] or developing contexts [44,45], this study focuses on the economies of the Southern Cone, which present peculiar opportunities and challenges regarding the green transition [1,5].

In the Southern Cone, previous studies have analyzed green products through the lens of economic complexity in Argentina [46,47] and Brazil [48]. However, in Chile, Paraguay, and Uruguay, there are no empirical studies that examine green products using the relatedness–complexity framework. On a global scale, Andres and Mealy [49] utilize their Green Transition Navigator platform to map the relatednessand complexity dynamics for over 100 countries, including those in the Southern Cone. None of the studies mentioned, however, incorporate complementary metrics such as income, inequality, complexity, and emissions associated with green products, nor do they present a smart portfolio of feasible and desirable strategies. Nevertheless, as noted by Hidalgo [19], the Relatedness–Complexity framework could be expanded by integrating product complexity measures with indicators of inequality associated with a product or the expected level of emission intensity. This study seeks to address the empirical gap by applying these metrics to identify feasible and desirable green export portfolios for the Southern Cone region. Additionally, it offers an integrated analysis of the green product space, considering factors such as complexity, income, inequality, and emissions. Furthermore, the study presents an empirical strategy that can be adapted to other economies, providing a valuable framework for promoting green export diversification.

The main results indicate that the economies analyzed could initially capitalize on feasible green opportunities based on their current capabilities before moving on to those with higher risk and greater potential returns. In this context, key sectors include goods related to renewable energies in Argentina and Brazil (solar, wind, offshore); complex chemicals linked to lithium development in Chile; bioenergy products (biofuels) in Paraguay; and the emerging alternative of green hydrogen in Uruguay. Furthermore, feasible and desirable green products identified for each Southern Cone country offer valuable insights for the formulation of data-driven public policies. For the first time, they highlight the range of opportunities for diversification towards environmentally beneficial products, which can be used to validate and/or adjust industrial policies and green growth agendas.

The article is structured as follows: the next section provides the background literature, followed by an explanation of the methodology and data. This is followed by the Results and Discussion Section, final remarks are then highlighted, and lastly, the limitations and research agenda are discussed.

2. Background Literature

This section provides an overview of the existing literature on export diversification strategies, with a particular focus on frameworks grounded in knowledge and economic complexity. It also examines how the literature integrates green products into diversification strategies, exploring their role in fostering sustainable development and economic transformation.

The seminal work of Mealy and Teytelboym [50] on economic complexity and green products has inspired a series of studies applying these concepts across different contexts and scales [43,44,45,46,47,48]. However, recent research has emerged on economic complexity and products linked to green value chains. For instance, Hausmann et al. [51] compiled a list of strategic products within Green Supply Chains (green value chains include a range of products from critical minerals to final goods, such as electric vehicles, heat pumps, green hydrogen, wind power, solar power, hydroelectric power, nuclear power, batteries, and electric grids [52]) and developed a report titled Growth Through Inclusion in South Africa, which highlights green supply chain products within the “product space”. The latest research on green transitions in conjunction with economic complexity methods is the Greenplexity platform. This tool helps policymakers design strategies to enter green value chains that drive the energy transition, such as critical minerals, solar panels, and electric vehicles [52].

Therefore, the focus on products with environmental benefits and green value chains is gaining importance in both the academic literature and practical decision-making, promoting data-driven strategies for smart diversification.

Knowledge and Complexity-Based Diversification Strategies

Countries can effectively diversify their exports by leveraging existing knowledge and established industries. According to evolutionary economic geography, economies tend to expand into products that are closely related to their current offerings, utilizing their accumulated capabilities and expertise [9,10,11,53]. However, measuring productive capabilities poses challenges. To address this limitation, scholars have introduced the concept of relatedness, which indicates that two products or industries are considered related when they require similar knowledge or inputs [14]. Indeed, research has shown that relatedness plays a crucial role in diversification [10,11,54] and is particularly relevant in the context of green industries [46,55,56].

The economic complexity framework provides a valuable global tool for assessing an economy’s productive capabilities by analyzing the geographic distribution of economic activities [18,36]. Moreover, economic complexity offers a potentially powerful paradigm for studying the dimensions of sustainable development [57]. In particular, the Economic Complexity Index (ECI) captures the complexity of a country’s exports, reflecting not only the variety of products it produces but also the sophistication of the knowledge and skills embedded in those products. Additionally, this approach has led to several measures that connect product data to several variables like income [58], inequality [59], and emissions [42]. These connections enable the consideration of additional factors that can be included in export diversification strategies.

Relatedness and economic complexity are utilized to analyze potential diversification options by assessing the risk and strategic value of developing specific products within a territory [9]. This framework also facilitates the identification of products that are currently absent in a territory and the evaluation of various diversification strategies. Specifically, products that exhibit both high relatedness and complexity are considered feasible and desirable diversification opportunities. This creates an efficient diversification frontier that maximizes both the complexity of the products and the ease of entering that market [9,19].

To date, the literature has primarily concentrated on feasible strategies or those deemed desirable solely based on income metrics. While these approaches provide valuable insights into the economic potential of diversification, they often overlook other critical factors such as social and environmental dimension. As the demand for the just transition approach increases, it becomes essential to broaden the scope of research to include a wider array of considerations that contribute to both economic viability and long-term societal benefits.

3. Methods and Data

This section outlines the methodology employed to identify feasible and desirable export opportunities for environmentally beneficial products in the Southern Cone. Fist, we present the key concepts and metrics that underpin our analysis. Then, we describe the data sources utilized in our study. Finally, we detail the methodology used to identify both feasible and desirable opportunities for diversification into green products, ensuring a comprehensive approach to evaluating the potential for sustainable development in the region. Supplementary Material S.M-1 provides an overview over the measures we run using trade data, which are derived from the prior literature.

3.1. Revealed Comparative Advantage (RCA)

The Revealed Comparative Advantage compares the proportion of a specific product in a country’s total exports with the proportion of that same product in global exports. If this comparison results in a value greater than 1, it indicates that the country is exporting more than would be expected based on the product’s global market share. In other words, the country is specialized in that product due to its comparative advantage in exporting it [60].

$${\mathrm{RCA}}_{\mathrm{cp}}={\displaystyle \frac{\raisebox{1ex}{${\mathrm{x}}_{\mathrm{cp}}$}\!\left/ \!\raisebox{-1ex}{${{\displaystyle \sum }}_{\mathrm{p}}{\mathrm{x}}_{\mathrm{cp}}$}\right.}{\raisebox{1ex}{${{\displaystyle \sum }}_c{\mathrm{x}}_{\mathrm{cp}}$}\!\left/ \!\raisebox{-1ex}{${{\displaystyle \sum }}_{\mathrm{c}}{{\displaystyle \sum }}_{\mathrm{p}}{\mathrm{x}}_{\mathrm{cp}}$}\right.}}$$

(1)

where ${\mathrm{x}}_{\mathrm{cp}}$ represents the exports of product p from country c.

3.2. The Product Space (Proximity) and Relatedness

Several studies analyze the interconnection between products or industries based on the similarity of the skills and resources required for their production [15,17,31,61]. To establish this interconnection, the proximity between products (φij) is calculated under the assumption that related products are more likely to be found in the same country, as they require similar capabilities [17]. The measure of proximity (φij) is defined as the minimum conditional probability of being co-exported by the same country for each pair of goods i and j:

$${\phi }_{\mathrm{ij}}= \min (\mathrm{P}({\mathrm{RCA}}_{\mathrm{i}}>1|{\mathrm{RCA}}_{\mathrm{j}}>1), \mathrm{P}({\mathrm{RCA}}_{\mathrm{j}}>1|{\mathrm{RCA}}_{\mathrm{i}} >1))$$

(2)

where P(RCA_i > 1∣RCA_j > 1, is the conditional probability that a country is competitive (RCA > 1) in product i given that it is competitive in product j. The measure of proximity helps us to build a network named “the product space”.

Then, the relatedness measure (${\omega }_j^c$) link the proximity of products with the country’s specialization portfolio:

$${\omega }_j^c={\displaystyle \frac{{{\displaystyle \sum }}_i{\rho }_i^{c }{\phi }_{ij}}{{{\displaystyle \sum }}_i{\phi }_{ij}}}$$

(3)

where ${\rho }^c$ = 1 if country c has a RCA > 1 in product i, and ${\phi }_{ij}$ represents the proximity between product j and any other product i. In this study, ${\phi }_{ij}$ indicates the degree of proximity of a green product to the rest of the products (both green and non-green) that make up the export basket of the countries under analysis. The relatedness measure varies between 0 and 1, with higher values indicating that the country has developed a comparative advantage in many products related to product i and would have a greater likelihood of exporting it in the future.

3.3. Economic Complexity Index and Derived Metrics

Economic Complexity Index (ECI): Following Hidalgo and Hausmann [18], we define a binary country–product matrix M. Each element $m_{cp}$ is $m_{cp}=1$ if the RCA > 1. Then, the diversity of each province results by summing the row of M matrix $d_c={{\displaystyle \sum }}_p{M}_{cp}$ and the ubiquity is obtained by summing the columns of M matrix $u_p={{\displaystyle \sum }}_c{M}_{cp}$. The ECI is defined as the eigenvector associated with the second largest eigenvalue of the matrix $\tilde{M}=D^{-1}S$, where D is the diagonal matrix form of the diversity vector $\left(d_c\right)$ and S is a symmetric similarly matrix denoted by

$$S_{c{c}^{\prime }}={\displaystyle \sum }_p{\displaystyle \frac{M_{cp}{M}_{c^{\prime }p}}{u_p}}$$

(4)

Product Complexity Index (PCI): This is used as a proxy for the technological sophistication of a product [18].

(5)

PRODY: This is a measure of the income level associated with the export of a product, weighted by the comparative advantage of the exporting countries [62].

$$PROD{Y}_p={{\displaystyle \sum }}_c{\displaystyle \frac{(x_{cp}/X_c)}{{{\displaystyle \sum }}_c(x_{cp}/X_c)}}GDPp{c}_c$$

(6)

where the numerator represents the share of the value of product p in the overall export basket of country c $(x_{cp}/X_c)$, and the denominator sums the shares of all countries exporting good p (${{\displaystyle \sum }}_c(x_{cp}/X_c)$. GDP_pc is the per capita Gross Domestic Product per capita of country c.

Product Gini Index (PGI): This is a product-level measure of income inequality among the corresponding exporting countries [59].

$$PG{I}_p={\displaystyle \frac{1}{N_p}}{{\displaystyle \sum }}_c{M}_{cp}{s}_{cp}Gin{i}_p$$

(7)

where $Gin{i}_p$ is the Gini coefficient for country c; $M_{cp}$ = 1 if country c exports product p with VCR > 1, but $M_{cp}$ = 0 otherwise; $s_{cp}$ is the proportion of exports of product p in country c; and $N_p$ is a normalization factor given ($N_p={{\displaystyle \sum }}_c{M}_{cp}{s}_{cp}$).

Product Emissions Intensity Index (PEII): Following the logic of PRODY [58] and PGI [59], this indicator provides a weighted measure of emissions at the product level. Specifically, it is calculated as the weighted average of the greenhouse gas emission intensity (E) of the exporting countries for each product, with the weighting based on the product’s share in the total exports of each country [42].

$$PEI{I}_p={\displaystyle \frac{1}{N_p}}{{\displaystyle \sum }}_c{M}_{cp}{s}_{cp}{E}_c$$

(8)

Focus on emissions is important because, for example, to mitigate potential carbon leakage, policymakers could explore complementary policies such as border carbon adjustments or stricter regulations for high-emitting industries [63]. You can see in the Supplementary Material S.M-2 a detailed table of the step-by-step method approach.

The main source of information is based on product exports (classified at the six-digit level of the Harmonized System (no list of environmental products can ever be considered final, as the Harmonized System (HS) classification requires continuous updates and revisions. Regardless of the specific definition used, all classifications of green products share two fundamental limitations: (1) Final use uncertainty: Determining the actual final use of many products is challenging. Numerous items categorized as green—such as filters, pumps, and pipes—can also serve non-environmental purposes. While survey-based statistics can help estimate usage patterns, their reliability at a global scale remains uncertain. (2) Defining “greener” products: The classification of green products depends on the study’s objectives. Some may focus on products that use fewer raw materials, are more energy-efficient, have longer life spans, or are easier to dispose of. However, assessing these characteristics requires comparisons within the same product category, which is inherently complex and often difficult to achieve [20]) HS-1992) in US dollars (USD) for the period 2018–2022. This timeframe is chosen to provide the most current diagnosis possible and to minimize the impact of short-term fluctuations in trade [49].We rely on export data from the BACI database published by the Center for International Studies and Prospective Information (CEPII), which compiles and refines international trade data from the United Nations Statistics Division (COMTRADE) [64].

The analysis employs data from the complete export basket to calculate various indicators, subsequently filtering for products with environmental benefits from the Southern Cone countries. We use the consolidated list of 293 environmentally beneficial products and its industrial composition (see Supplementary Material: S.M-3, S.M-4) developed by Mealy and Teytelboym [50]. Subsequently, we employ the per capita Gross Domestic Product and Gini index data by country [65] to calculate PRODY (the calculation of PRODY in a hypothetical case can be found in Supplementary Material: S.M-5) and the PGI, respectively. Finally, we compile and standardized Product Emissions Intensity Index (PEII) results from Romero and Gramkow [42].

Table 1. Variables and Data Sources.

Variable	Definition	Period	Data Source
Average Exports	Average exports of products (classified at the 6-digit level of the Harmonized System HS-1992). Values expressed in USD.	2018–2022	Own elaboration based on BACI, version 2024-01b [64]
Revealed Comparative Advantage (RCA)	RCA = 1 indicates that the country competitively exports the product [60].
Relatedness	Indicates the degree of proximity of a product to the other products in a country’s export basket [17].
Product Complexity Index (PCI)	Quantifies the degree of sophistication of products [66].
PRODY	Indicates the income level associated with a specific product or set of products [62].	2019	Own elaboration based on BACI data and World Bank
Product Gini Index (PGI)	Links exported products to the average level of income inequality in exporting countries [59].
Product Emissions Intensity Index (PEII)	Provides a weighted measure of emissions at the product level [42].	2003–2012	Compiled from Romero and Gramkow [42]

Source: own elaboration.

summarizes the variables, indicating their definitions, period, and data sources.

3.4. Empirical Strategy

Opportunities for green export diversification are defined through a combination of the existing literature and a methodological framework (Argentina’s Gini index for 2022 is 0.407, Brazil’s is 0.520, Chile’s is 0.430, Paraguay’s is 0.451, and Uruguay’s is 0.406 [65]) that incorporates criteria for just transition in desirable strategies. This approach primarily utilizes the filters and thresholds proposed by Hartmann [31] in their study focused on a Latin American economy, along with the recent contributions from Romero et al. [40]. By integrating these elements, the analysis aims to identify viable pathways for promoting sustainable export practices by classifying them into two groups: feasible and desirable strategies. While the desirable strategy appears more promising, the literature on economic complexity and relatedness has shown that countries generally cannot randomly pursue “distant” economic activities outside their current capabilities. Instead, they tend to follow transformation processes that are path-dependent [17]. Therefore, this study combines the criteria of feasibility and desirability to identify potential green diversification opportunities for the economies of the Southern Cone.

First, the feasible strategy aims to identify opportunities for diversification into products with environmental benefits, based on the available capacity and the products currently marketed by the economies. This involves identifying products that are closely related to the existing production matrix and/or goods that the economies are already exporting with a certain degree of emerging specialization

Three feasible strategies are identified based on the following considerations:

S1: Maintenance strategy: this highlights the importance of maintaining the country’s competitive position in green products that meet the threshold of RCA ≤ 1.5 [40].

S2: Related capabilities: this focuses on green products with a relatedness coefficient greater than 0.10. According to Hartmann et al. [31], this threshold indicates a growing probability of developing these exports in the future. A higher relatedness reflects greater similarity between the green product and the country’s export basket, indicating a stronger foundation of related knowledge for potential production and export.

S3: Trade inertia: this considers green products where countries are not yet specialized (RCA < 1) but maintain an intermediate level of export (RCA > 0.5) [31].

Table 2. Strategies for identifying feasible green opportunities.

Strategy	Feasibility Criteria	Parameters	Reference
S1	Maintenance	RCA ≤ 1.5	Romero et al. [40]
S2	Related Capabilities	Relatedness ≥ 0.10	Hartmann et al. [31]
S3	Trade Inertia	0.50 ≤ RCA < 1	Hartmann et al. [31]

Source: own elaboration.

summarizes the feasible strategies along with their associated parameters.

Secondly, the desirable strategy, as its name suggests, identifies options for green diversification that would potentially be more beneficial for economies in economic and socio-environmental terms. Three types of strategies are associated with the desirable path of green diversification:

S4: High-income strategy: following Hartmann et al. [31], a minimum relatedness threshold of >0.05 is adopted. Additionally, the filters prioritize products which countries are already exporting for, on average, more than USD 1,000,000, while also exhibiting a certain degree of emerging specialization (0.05 < RCA < 1). Furthermore, the PRODY metric, which reflects the income level associated with specific products [58], is considered. A higher PRODY indicates greater potential income related to the export of a product. In this study, a PRODY threshold above the average value of the entire export basket in 2019 (USD 20,024) is used.

S5: Just transition strategy: in addition to the parameters of the high-income strategy, this strategy considers the social (PGI) and environmental implication (PEII) of product diversification. A PGI value below 0.405 indicates that goods are typically produced by countries with lower levels of income inequality than those found in the Southern Cone countries (the dynamic version of each country’s dashboard allows sorting by other criteria of interest to occur, such as the type of diversification, the sector, and/or the environmental benefit). Additionally, the environmental criterion filters out green products with a designated “low” emission intensity, specifically those with a PEII ranging from 302.3 to 728.0.

S6: High complexity strategy: in this case, the Product Complexity Index (PCI) must exceed its diversification frontier (i.e., PCI > ECI). Additionally, it is required that the green products included in this strategy fall within the range of the highest quartile of relatedness. This indicates that these products are closely aligned with the existing production framework and are also high in complexity, making them an accessible and desirable option for green diversification.

Table 3. Strategies for desirable green opportunities.

Strategy	Feasibility Criteria	Parameters	Reference
S4	High Income	[Relatedness > 0.05] and [0.05 ≤ RCA < 1] and [Mean Exports > 1 M] and [PRODY ≥ 20,024]	Hartmann et al. [31]
S5	Just Transition	[Relatedness > 0.05] and [0.05 ≤ RCA < 1] and [Mean Exports > 1 M] and [PRODY ≥ 20,024] and [PCI > Diversification Frontier*] and [PGI < 0.405] and [PEII = Low-emission intensity]	Adapted according to Hartmann et al. [31] and Romero and Gramkow [42]
S6	High Complexity	PCI > Diversification Frontier* & Q3 ≤ Relatedness < Q4	Balland et al. [9,67]; Hidalgo [19]

Source: own elaboration. Note: Diversification Frontier* for Argentina, PCI = 0.064, Brazil, PCI = 0.36, Chile, PCI = −0.18, Paraguay, PCI = −0.34, and Uruguay, PCI = 0.15.

summarizes the desirable strategies along with their associated parameters.

The filters from the feasible and desirable strategies (Table 2 and Table 3) allow us to identify green products that are both feasible and desirable for the analyzed economies. In summary, we create a portfolio of feasible and desirable green products for each Southern Cone country.

4. Results

This section presents the results of our analysis on green export diversification opportunities within the Southern Cone region. First, we examine the Green Diversification Dashboard, which outlines the potential for diversification into environmentally beneficial products (green products) based on the characteristics of different diversification strategies. Second, we present a detailed analysis of the green product space. Third, we turn to the country-specific highlights, offering a closer look at the green product space for each country in the region, illustrating, with specific examples, how the opportunities for green export diversification differ by country. Finally, we present the expected results under each diversification strategy (S1–S6) for each country, emphasizing the trade-offs between product complexity, income, inequality, and emissions.

4.1. Green Diversification Dashboard of the Southern Cone

Figure 1 summarizes the opportunities for diversification into environmentally beneficial products (green products), as expressed in the number of products by strategy type (S1, S2, S3, S4, S5, S6) for the countries of the Southern Cone. The range of export diversification opportunities towards green products varies depending on the specific country within the Southern Cone. As expected, the largest economy analyzed in this study reflects the highest absolute number of green products; Brazil, for example, presents a total of 52 green products considered feasible and 45 desirable. Argentina, in turn, has 19 feasible green products and 40 desirable ones. Chile presents 10 feasible diversification opportunities and 52 considered desirable. Paraguay, on the other hand, shows 8 feasible opportunities and 20 desirable ones.

Finally, Uruguay has 9 feasible and 18 desirable opportunities. The detailed dashboard by product country is available (see Supplementary Material S.M-6 named countries dashboards). In comparative terms, Brazil and Argentina are the economies best positioned in terms of feasible diversification options, i.e., those close to the current productive structure, either through maintenance (S1), related capabilities (S2), and/or commercial inertia (S3). As for desirable diversification opportunities, broader options are identified for all the economies, derived from products with higher complexity that transcend the diversification frontier and align with the criteria of a just transition (lower inequality and emissions). However, although these options offer potential benefits, they are challenging to achieve, as they are not directly linked to the current production matrix. The feasible and desirable options (desirable within reach) are limited to only five products for Brazil and two for Argentina.

It is evident that not all green products represent feasible or desirable opportunities for certain economies. In the case of countries such as Paraguay and Uruguay, the main barriers to green export diversification include a low affinity for these products (S2 = 0), limited export volumes, and limited specialization in green exports. These constraints mean that no green products exceed the filters of strategies S4 and S5 (high income and just transition).

4.2. Green Product Space

First, to illustrate the key characteristics of green products, we plot the product space for each relevant variable, namely PCI, PRODY, PGI, and PEII, summarizing the main findings in Figure 2 (for further details, see Supplementary Material S.M-7). The green product space shows that Zone 1 of the network clusters the least desirable green products, which are characterized by low complexity and income (lower PCI and PRODY, respectively), along with high levels of inequality and emissions (higher PGI and PEII, respectively). In contrast, Zone 2 clusters the most desirable green products in terms of higher complexity and income and lower levels of inequality and emissions (higher PCI, higher PRODY, lower PGI, and lower PEII). Finally, Zone 3 reveals green products that, on the one hand, exhibit a medium-to-high level of complexity (PCI) but show highly dispersed income levels ranging from high to low (PRODY). Moreover, these products display low to medium levels of inequality and emissions (PGI and PEII). Once the characteristics of green products are understood, we proceed to plot the product space of feasible and desirable export opportunities for each country, evaluating the zones in which they are located. This analysis is essential for identifying which export paths align with each country’s capabilities and prospects.

4.3. Highlights by Country

4.3.1. Argentina

Argentina shows a trade-off between diversifying towards more sophisticated products and the more probable options based on existing capabilities. However, some green products align with both strategies: they are feasible, as the necessary capabilities are available, and at the same time, desirable, in terms of their potential economic and socio-environmental returns (Figure 3). Overall, considering the zones identified in Figure 2, Argentina shows a higher number of green product opportunities in Zone 2 (high level of complexity and income levels and low levels of inequality and emissions) and Zone 3 (less attractive due to higher dispersion of potential income and associated medium levels of inequality and emissions).

Examples of feasible and desirable options (called desirable within reach) include products from the machinery sector, such as dryers used in wastewater treatment (842220) and textiles used to ensure the effective drainage of leachate or gases from landfills (560300). Regarding the machinery sector, machinery for cleaning bottles, which enables their reuse and subsequent recycling (841939), and gas turbines (841182) also appear as export diversification options. Indeed, the machinery sector is one of the main industries in which Argentina is specialized [68], which provides a knowledge base that supports diversification into these green products.

Additionally, Argentina, has potential in renewable energies like wind energy [69,70], green hydrogen [71], and electromobility [72]. Indeed, the results show inputs and products related to renewable energy, such as mechanical machines and appliances (847989), machinery for thermal treatment (841989), parts for turbojet or turboprop engines (841199), refrigeration equipment (841869), and parts for hydraulic motors (841290). Some of these products are key to the development of green hydrogen, which is critical for the decarbonization of economies.

Argentina has the conditions to foster the value chain for this strategic product. The Cluster of Renewable Energy Industries and Technologies of Argentina (CITERA) brings together national companies that are involved in various renewable energy sources developed in the country, such as wind, solar photovoltaics, geothermal, tidal, wave, hydro, biomass, landfill gases, sewage plant gases, biogas, and biofuels. A strong point for Argentina is the abundance of renewable resources, which, according to recent estimates, have the potential to generate 29,000 TWh/year from solar photovoltaic, wind, and hydroelectric energy [73]. However, while the availability of natural resources, such as wind energy, is a necessary condition for development, it is not sufficient by itself. Coordinated efforts, capabilities, public policies, and a national innovation system are required to support and promote the energy transition [70,74].

The analysis also identifies products from the plastics sector, such as non-cellular sheets of styrene polymers (392030) and cellular polyurethane sheets (392113), which help manage solid and hazardous waste. Upon initial examination, these products and inputs may not seem related to the environmental agenda. However, in line with international evidence, they align with the idea that non-green products or technologies can be adapted to contribute to the green transition [43,46,72,75,76].

4.3.2. Brazil

The complete list of Brazil’s green export diversification opportunities includes 99 products. The following summary highlights several examples of opportunities that are closely aligned with Brazil’s current challenges and the resources available in the country. Figure 4 represents the opportunities for Brazil in terms of what is feasible (blue), desirable (orange), and desirable within reach (red).

Within the feasible green products, we identify items related to wastewater management, including calcium phosphates (283526), calcium hydrogen orthophosphate (283525), sodium hydroxide (281511), anhydrous ammonia (281410), and chlorine (280110). These products are critical in potable water treatment processes in Brazil [77]. Other feasible products associated with environmental management include iron or steel containers (>300 L) (730900), which are used in applications such as anaerobic digesters and potable water storage systems, as well as ethylene and propylene polymer sheets (392010, 392020), employed in the management of solid and hazardous waste.

Feasible options also include products such as acrylonitrile–butadiene rubber (NBR) (400259), mixing and crushing machines (847982), and electromagnets (850590), all of which are used in waste management and recycling. These products align with the objectives of Brazil’s National Solid Waste Policy (PNRS), which promotes the reduction, recycling, and treatment of waste to improve public health and environmental sustainability [78].

Although this paper does not analyze the adoption of products per se, but rather focuses on export diversification opportunities, some products that could offer benefits to the local market are identified. In this context, products such as phenolic resins (390940), used in carbon capture and storage, and goods such as parts and accessories for measuring or verification equipment (NES 903190), employed in air pollution control, represent key opportunities to promote more sustainable practices. This is particularly relevant considering that Brazil is a significant emitter of greenhouse gases [79].

The country demonstrates potential in solar energy markets and green hydrogen markets [80,81,82]. Additionally, Brazil can capitalize on its mineral deposits, as the country is already well positioned to further increase its renewable energy production, with more than 80% of its electricity derived from renewable sources [83]. Indeed, the results highlight renewable energy-related goods, such as steam and gas turbines (840619), hydraulic turbines, water wheels (841013), turbine parts and water wheels (841090), and gas turbine engines (8410190). These products are associated with lower pollutant emissions compared to traditional energy generation methods, like can capture and store carbon [49,84].

Brazil presents opportunities for products used alongside turbines and boilers to generate electricity. Examples include alternating current generators with power capacities of 75–375 kVA (850162), 375–750 kVA (850163), and greater than 750 kVA (850164), all employed in renewable energy plants. This trend aligns with the global shift toward renewable energy, which has gained momentum due to its recognized role in combating climate change [85].

In addition, products associated with renewable energy appear as desirable strategies. For instance, parts of steam and gas turbines (840690) allow for more efficient energy use compared to conventional generation methods, hydraulic turbines, water wheels (841011), and parts of hydraulic motors (841290), which are useful for turbine production. In sum, Brazil presents higher number of desirable opportunities in Zone 2 (most desirable in terms of complexity, income, inequality, and emissions).

4.3.3. Chile

Figure 5 highlights Chile’s export diversification opportunities according to its feasible and desirable strategies. These products illustrate how various products associated with key sectors, such as lithium mining and environmental management, offer diversification options that not only align with national sustainable growth policies [86], but also have the potential to strengthen Chile’s competitiveness in international markets, while promoting a transition toward greener and more sustainable practices. Overall, an interesting outcome for Chile is that, even though the absolute number of products is lower than other countries, it has a higher number of feasible opportunities in Zone 2 (most desirable in terms of complexity, income, inequality, and emissions).

First, examples of feasible green products include machinery parts (842389) and mineral mixing machines (847439) that can be employed in carbon capture and for a more efficient consumption of energy technologies [87]. Additionally, we identify two green products related to transportation and instruments: ozone measuring instruments (901580) and barges (890710), the latter being used as protective barriers against pollution, absorbing or containing oil spills [87].

A particularly noteworthy feasible product is “inorganic compounds, liquid/compressed air, amalgams” (285100), which is classified under the feasible strategy of commercial inertia. This product is considered feasible as it demonstrates intermediate specialization during the studied period, high sophistication (PCI = 1.47), and average exports of USD 4,604,839.6. This finding aligns with Garcés [88], who notes Chile’s significant potential to develop new lithium-derived products, particularly those with higher added value, such as hydroxides, which are included in chapter 28 of the tariff schedule for inorganic chemicals. Therefore, the products “inorganic compounds” represent a green product which Chile could utilize, given its commercial inertia and existing production profile. An important yet underexplored aspect addressed in this article, which warrants further investigation, is the need for a systematic assessment of the social and environmental impacts of lithium development [89].

On the other hand, several examples of desirable green products are presented, such as accessories for surveying instruments (901590). These goods are used in the maintenance and repair of instruments crucial for environmental monitoring and management [87]. Such products are particularly relevant in the context of Chile’s environmental impact assessment processes, as they are legally considered key tools for achieving sustainable development, environmental protection, and marine conservation [90].

Additional examples of desirable products include sludge dryers (841939), phenolic resins (390940), nonwoven textiles for efficient leachate drainage (560300), and gas turbines (841182). The latter can be represented by gas turbines that burn natural gas, turbines for electricity generation from recovered landfill gas, coal mine ventilation gas, or biogas (clean energy system) [87], which are also associated with lower emissions of pollutants compared to traditional energy generation methods [84].

4.3.4. Paraguay

In the case of Paraguay, export diversification opportunities toward environmentally beneficial products are more limited compared to other economies in the Southern Cone. Nevertheless, the following presents some examples of feasible and desirable green export diversification options, contextualized within the country’s productive environment (Figure 6).

First, it is well known that Paraguay’s productive structure is largely shaped by its geography and natural resources. A significant portion of its GDP derives from agroindustry (livestock, maize, soybeans, and wheat), electricity generation (Itaipú hydroelectric plant), food processing, and the production of chemicals, plastics, and textiles [91,92]. In this context, several examples of green products derived from feasible strategies and in which Paraguay is already specialized are highlighted, such as unsaturated ethyl alcohol > 80% by volume (220710), which is a renewable source (if bioethanol), produced from biomass such as sugarcane or maize. According to Rodríguez et al. [93], Paraguay has significant potential to produce biodiesel, particularly for export, by processing a large portion of its oilseed grain production within the country’s major oilseed industry.

Another feasible product based on maintenance is chlorine (280110), which, despite having a mixed reputation, is often associated with water purification. In agricultural processes, it can be used to disinfect equipment and ensure healthier crops. Lastly, as an example of a product derived from the feasible strategy, we find aluminum barrels, drums, boxes, etc., with a capacity < 300 L (761290), which are commonly used as waste containers, including those for municipal or hazardous waste. Additionally, given that these containers are made of aluminum, it is important to note that aluminum is 100% recyclable without a loss of quality.

Some of the products that are desirable due to their high complexity and, at the same time, are the green products least distant from Paraguay’s export structure include polystyrene cellular sheets (392111), fiberboards with mineral binder or cement (680800), multi-wall glass insulating units (700800), mattresses, and other nonwoven glass fiber products (701939), as well as non-cellular sheet/film. These products are related to heat and energy management, as they enable thermal and acoustic insulation in roofs, walls, and floors, serve as exterior and interior cladding, and provide thermal and moisture protection in all types of construction. This generates energy savings by reducing heat transfer and the use of heating and cooling systems [87]. They are also related to other industries such as packaging and insulation in refrigeration and heating systems.

4.3.5. Uruguay

Similarly to Paraguay, the green export diversification options for Uruguay are relatively more limited compared to the other economies analyzed. However, it is possible to identify some examples of feasible and desirable products, which are represented in Figure 7.

The study of green diversification possibilities in Uruguay reveals several products in which the country is already specialized and that exhibit a level of complexity above the average, with significant export volumes. Two examples of such products include nonwoven textiles excluding felt (560300), which are used in landfills for the drainage of water and gases, filtration of wastewater, construction protection, and erosion control and are efficiently applied in the medical and construction industries [94]; the second product is the continuous action conveyor belt or goods elevator (842833), used in resource management and recycling, as well as in the transportation of goods within factories.

Additionally, some products within the feasible strategy include hydrogen peroxide (284700), a biodegradable product with multiple applications, such as in dental bleaching processes, pulp and paper production, textiles, wastewater treatment, and fuel cells and as an antimicrobial chemical for preservation, disinfection, and sterilization in the food, medical, and domestic industries. Moreover, if hydrogen peroxide production were based on green hydrogen, it could contribute to the consolidation of a sustainable cycle [95,96]. This is particularly relevant, as Uruguay is currently undergoing its second energy transition, aiming to position itself as a global leader in renewable energy production and use. In this context, the Green Hydrogen Roadmap in Uruguay stands out, which foresees an investment of USD 18 billion by 2040, creating more than 30,000 jobs, with the European Union being the main target market [97].

Here, hydrogen peroxide is highlighted because, according with Fetzer et al. [98] in their Supply Chain Network Analysis, the input of this product is hydrogen (a limitation of HS-1992 and even HS-2022 is that there are not special codes for gray, blue, and green hydrogen), and in Uruguay’s context, it is highly recognized that green hydrogen presents an opportunity for Uruguay, both for the decarbonization of its economy and in terms of export potential [99]. Also, according to IDB [100], Uruguay, based on its renewable energy resources, could produce green hydrogen at around 1.2 to 1.5 USD/kgH₂ by the year 2030, depending on the region of the country. These values fall within an internationally competitive range.

4.4. Expected Outcomes Across Different Diversification Strategies

Following Hartmann et al. [31], we illustrate the distribution of key variables—economic complexity (PCI), average income (PRODY), inequality (PGI), and emissions (PEII)—associated with green products for each country in the Southern Cone. The boxplots present these variables across different diversification strategies (S1, S2, S3, S4, S5, and S6), highlighting how the characteristics of green products vary under the adoption of feasible and desirable export strategies (Figure 8).

The feasible strategies—maintenance (S1), related capabilities (S2), and commercial inertia (S3)—involve a limited number of green products, reflecting a low level of specialization and export affinity towards environmentally beneficial goods in most Southern Cone countries. Brazil is the exception, with a broader portfolio of green products in which it is already specialized. These strategies would not be optimal, given the higher dispersion in average income (PRODY), complexity (PCI), inequality (PGI), and emissions associated with green products (PEII) included in these strategies (S1, S2, S3). Furthermore, in the cases of Chile, Paraguay, and Uruguay, the related capabilities strategy (S2) results in an empty set, reflecting the distance between these countries’ current export structures and green products.

Desirable strategies (S4, S5, and S6), by their nature, involve a focus on products with higher expected income (PRODY), as well as lower levels of average inequality (PGI) and associated emissions, which is evident in the presented plots. This is particularly true for Argentina, Brazil, and Chile, which have green products in strategies S4 and S5. Strategy 5 (S5) is the most beneficial but also the most challenging, as it incorporates all the desirable attributes related to environmentally beneficial goods.

Strategy 6 (S6) would significantly increase the level of complexity and equity associated with green products in the Southern Cone. However, this strategy still shows dispersion in income and emissions, although these would be relatively lower than those observed in the feasible strategies. Overall, the analysis provides insights into the trade-offs between product complexity, income potential, inequality, and emissions in the context of green export diversification.

In sum, it is noteworthy that the feasible strategies (S1, S2, S3) exhibit greater dispersion in all the variables of interest (complexity, income, inequality, and emissions). On the other side, desirable strategies S5 and S6 would indicate a transition towards more complex products, with higher income, lower inequality, and lower emissions.

5. Final Remarks

Research on economic complexity has shown that the type of exports a country engages in shapes its future trajectory of economic diversification and growth [31]. However, insufficient attention has been paid to the intersection on complexity, inequality, income, and emissions of environmentally beneficial goods. This paper addresses this gap by proposing six strategies for green export diversification that combine feasible attributes (green specialization, relatedness, and commercial inertia) and desirability criteria (income, equity, and low emissions). We apply this approach in the Southern Cone, using network science methods derived from economic complexity framework.

In most Southern Cone countries, desirable green diversification opportunities are concentrated in products with higher sophistication and income and lower inequality and emissions. In contrast, feasible opportunities are less attractive in terms of sophistication, income, inequality, and emissions.

We developed interactive dashboards that display the feasible and desirable green diversification portfolios for each Southern Cone country and provide contextualized examples of environmentally beneficial goods within each country’s green product space network. Our results highlight the green export diversification possibilities for the Southern Cone region and offer insights to inform policy agendas aimed at fostering green and inclusive economic growth.

The finding suggest that the economies analyzed could initially capitalize on feasible opportunities based on their existing capabilities and then explore higher-risk opportunities that offer greater potential returns. Based on the analysis and diagnosis of each country, the following common implications emerge:

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The significance of accumulated industrial capabilities, which can be leveraged for the green transition. For example, the knowledge base in machinery and equipment sectors used for developing inputs and machinery linked to renewable energy, waste management, and water treatment.

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The opportunity to drive development by tapping into natural resources linked to regional capabilities. In particular, the region’s renewable energy products in Argentina and Brazil (solar, wind, and marine energy); lithium-based products in Chile; agro-energy (biofuels) in Paraguay, given the country’s favorable natural conditions; and green hydrogen products in Uruguay.

To maximize the benefits of green export diversification, Southern Cone economies should foster policies that promote innovation and build capacities in key sectors. In this line, it could be interesting to reinforce their national innovation system considering their fundamental role towards the sustainable transition [101]. Additionally, fostering regional cooperation will be essential for creating a supportive environment that enhances these opportunities.

It is important to emphasize that the main objective of this analysis is to provide an initial roadmap to guide policymakers toward green export diversification. Therefore, the “Countries dashboards” (see Supplementary Material S.M-6) of green opportunities (feasible and desirable), as presented in this document, should not be seen as a definitive list but rather as the outcome of a rigorous study whose strategies and minimum condition filters may be open to debate (the strategy filters are focused on Latin American countries, whose conditions are not necessarily transferable to other regions). Ultimately, the “target” green products for the Southern Cone region should emerge from broader consultative processes (qualitative) involving key stakeholders from the public, private, and academic sectors, while also considering relevant country-specific constraints. Qualitative methods in policy formulation could include interviews, focus groups, case studies, and citizen participation to capture perceptions and needs [102]. These approaches complement quantitative analysis, allowing for more contextualized and effective policy design.

It is widely recognized that the countries of the Southern Cone generally exhibit few green products with Revealed Comparative Advantage, which by default would suggest broad possibilities for export diversification. However, are all products without RCA real opportunities for green diversification? Which of them represent feasible options in the short and medium term, and which are desirable but achievable in the long term? This document has provided concrete answers to these questions through the economic complexity approach. Consequently, this study has contributed to the existing literature in two main ways. First, it is a pioneering effort in identifying feasible and desirable green diversification portfolios in the Southern Cone region. Second, through the methodology employed, it was possible to integrate a range of relevant elements to formulate feasible and desirable strategies, including green strengths to maintain, trade inertia, relatedness, high income, just low-emission transition, and high complexity.

6. Limitations and Research Agenda

A primary limitation of this study stems from the data available on environmentally beneficial products. Export data and tariff classifications, being inherently commercial, are primarily defined from the consumer’s perspective [50]. These classifications do not provide insights into production processes or products that are not internationally traded. However, as Stiglitz [103] observes, developing countries that have successfully achieved economic growth often did so through trade and exports. Therefore, this study offers a roadmap for identifying green opportunities based on export data, providing a clear path toward recognizing both feasible and desirable opportunities for diversification into environmentally beneficial products. Additionally, given that the circular economy forms the backbone of a green economy, future research could benefit from integrating the list of products with the circular characteristics outlined by Mulder and Albaladejo [104] and aligning it with the 2022 Harmonized System (HS) [105]. This would enable further exploration of the circular economy in the Southern Cone through the lens of economic complexity or alternative methodologies that complement recent advances on the field (for instance [106].

On the other hand, future research could explore regression techniques to assess the impact of the ECI on green economic growth in the Southern Cone region. These may include a Generalized Linear Model (GLM), Generalized Least Squares (GLS), and Two-Stage Least Squares Regression (2-SLS), which can be used to address issues of heterogeneity and endogeneity [107]. In addition, conducting endogeneity tests would be valuable in determining whether the development of green export opportunities influences a country’s existing capabilities or specialization.

Moreover, the current methodology could be enhanced by incorporating qualitative studies and additional data that better capture local economic dynamics and green product life cycle management phases [108], while also integrating the perspectives of key public and private stakeholders. Finally, considering the growing strategic importance of minerals in the energy transition, addressing this issue has become increasingly relevant within both economic and political agendas [109]. Further research should not only assess the competitiveness of these minerals but also focus on their social and environmental impacts. For instance, as highlighted by recent contributions, a just transition approach is essential [110], as well as the analysis of the link between critical raw materials, environment, and green growth [111].