MULTIDIMENSIONAL ECONOMIC COMPLEXITY AND ECONOMIC GROWTH: EVIDENCE FROM THE 10 MOST COMPLEX COUNTRIES

Authors : Seyhun Tutgun

Pages : 1372-1404

Doi:10.17130/ijmeb.1596858

View : 188 | Download : 319

Publication Date : 2025-12-25

Article Type : Research Paper

Abstract :Economic complexity, reflecting the collective know-how and the depth of national capability sets, features prominently as a key concept within the economic growth literature. This study addresses the multidimensional nature of economic complexity by analyzing the interplay between economic growth (GDP per capita), the Economic Research Complexity Index (ECIR) reflecting knowledge generation capacity, the Economic Trade Complexity Index (ECITRA) capturing the sophistication of a nation\\\'s export structure, and the Economic Technology Complexity Index (ECITEC) indicating technological advancement. To provide a more robust analysis, population (POP) and human capital (HUM) are included as control variables. The study investigates these relationships through three distinct models, each focusing on one dimension of complexity. The analysis focuses specifically on the world\\\'s 10 most complex economies: Austria, Czechia, Germany, Japan, Singapore, Slovenia, South Africa, Sweden, Switzerland, and the United Kingdom. The relationship between economic growth and multidimensional economic complexity is analyzed using annual data for the period 1999-2021. Second-generation panel data analysis techniques are used in the study, where for each of the three models, cross-section dependence, homogeneity/heterogeneity, unit root, and cointegration tests are applied respectively. After finding that there is a cointegration relationship between the series, the long-run coefficients are estimated using the Common Correlated Effects (CCE) and Augmented Mean Group (AMG) estimators, which are robust to cross-sectional dependence and heterogeneity. Furthermore, the causal relationships between the variables are examined using the Dumitrescu-Hurlin panel causality test. The empirical findings indicate significant heterogeneity in the coefficients of ECIR, ECITRA, and ECITEC, both at the panel-average level and, more strikingly, for individual countries. Ultimately, the findings reinforce the importance, relevant for all nations, of cultivating complex capabilities and aligning human capital with the demands of the knowledge economy as crucial elements for achieving long-term development.
Keywords : Ekonomik karmaşıklık, Ekonomik büyüme, Panel veri analizi

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