Economic complexity and elasticity ratio: a theoretical and empirical approach

André Mellini () and Guilherme Jonas Costa da Silva ()

Brazilian Journal of Political Economy, 2024, vol. 44, issue 4, 730-752

Abstract: This paper analyzes the role of economic complexity in the ratio of Thirlwall’selasticities, fundamental to understanding the reason for the unequal growth of countries. Tothis end, a theoretical model is used for a group of nations. Differences in growth ratesamong countries are associated with different ratios of income elasticities of exports and imports.According to econometric estimates, the country that manages to increase the economiccomplexity of its export basket, the investment/GDP ratio and has a lower GDP per capitaimproves the elasticities ratio and, therefore, its long-term growth. In other words, theresults are categorical in the sense of demonstrating the central role of these policies for thecountry to advance in the process of structural change and move towards the production of more complex manufactured goods, because these can ensure sustainable economic growth,that is, compatible with the equilibrium of the balance of payments. JEL Classification: C2; C22; F14; F41; F43.

Keywords: Economic complexity; Thirlwall’s Law; international trade; economic growth; structural change (search for similar items in EconPapers)
Date: 2024
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