Does institutional quality foster economic complexity?

Trung Vu

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the extent to which the quality of institutions, measured by the Economic Freedom of the World index, helps shape cross-country differences in economic complexity. To this end, I employ the intensity of ultraviolet radiation (UV-R) to isolate an exogenous source of variation in institutions, which helps circumvent endogeneity concerns. Empirical results indicate that the exogenous component of institutional quality exerts a strong and robust positive effect on economic complexity. The findings prevail after performing a battery of robustness tests. Furthermore, I find that institutions affect economic complexity by inducing human capital accumulation and strengthening incentives for innovative activities.

Keywords: Economic Complexity; Economic Freedom; Institutions; Capabilities; Productive Structures. (search for similar items in EconPapers)
JEL-codes: H11 O11 O43 (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-gro
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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https://mpra.ub.uni-muenchen.de/97843/1/MPRA_paper_97843.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/107912/8/MPRA_paper_107912.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/108354/8/MPRA_paper_107912.pdf revised version (application/pdf)

Related works:
Journal Article: Does institutional quality foster economic complexity? The fundamental drivers of productive capabilities (2022)
Working Paper: Does institutional quality foster economic complexity? The fundamental drivers of productive capabilities (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:97843

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