Does Technology Drive Dematerialisation? Software Complexity, Income, and Material Footprint across EU-27 and MERCOSUR-4

Abstract Technological progress is often assumed to reduce material consumption, yet this claim remains empirically contested. This study tests whether technology drives dematerialisation by comparing the European Union (EU-27) and MERCOSUR (4 founding members) in the context of the EU-MERCOSUR Association Agreement. The analysis combines Sequence Analysis with panel regressions and a GitHub-derived measure of software economic complexity (ECI software ). The EU-27 shows higher software complexity and R&D intensity (1.76% of GDP) but functions as a net material importer (+ 6.0 t/cap). MERCOSUR-4, despite lower software complexity and R&D intensity (0.56% of GDP), operates as a net material exporter (− 6.4 t/cap). Sequence Analysis of 25-year trajectories (2000–2024) identifies four trajectory clusters; EU and MERCOSUR countries intermix across clusters rather than separating by technological capacity, suggesting that technology does not determine material trajectories. Panel regressions over 22 years (2000–2021, N = 430–682) show that three of four World Bank technology indicators are positively associated with Material Footprint ( p < 0.05). ECI software over 5 years (2020–2024, N = 155) shows no significant effect ( p = 0.55). Crucially, the three initially significant indicators—R&D, patents, and researchers—become non-significant when controlling for GDP per capita ( p = 0.20–0.37), whilst ECI software ( p = 0.55) and high-technology exports ( p = 0.19) never reach significance even alone. Technology–consumption associations are thus a statistical artefact of income confounding; neither software capabilities nor traditional technology indicators independently predict material flows, operating instead as markers of affluence rather than drivers of efficiency. JEL Codes: Q56; O33; F18; C23