The Heterogeneous Effect of Economic Complexity on Growth and Human Development: New Empirical Evidence Using Buffered Panel Threshold Regression

Fayçal Hamdi, Saïd Souam () and Messaoud Zouikri ()
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Fayçal Hamdi: USTHB - Université des Sciences et de la Technologie Houari Boumediene = University of Sciences and Technology Houari Boumediene [Alger], RECITS - Laboratoire de recherche opérationnelle, de combinatoire, d'informatique théorique et de méthodes stochastiques - LRECITS - Laboratoire de recherche opérationnelle, de combinatoire, d'informatique théorique et de méthodes stochastiques
Saïd Souam: EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, UPN - Université Paris Nanterre
Messaoud Zouikri: EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, UPN - Université Paris Nanterre

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Abstract: In this study, we apply the Buffered Threshold Panel Data model developed by Belarbi et al., to explore the effect of economic complexity (EC) on growth and human development. We use a panel data set from 92 developed and developing countries from 2002 to 2016. Our findings reveal a nonlinear relationship between EC growth and human development, contingent on the studied countries' institutional quality and resource dependence. Contrary to previous research, we demonstrate that the effects of EC on growth and human development are heterogeneous and could be negative both in the short, medium or long term in some growth regimes. We also provide evidence supporting the convergence hypothesis for growth while suggesting a divergence for human development. A noteworthy finding of our study is that the extent of the negative impact of EC on growth varies based on a country's resource dependency. Furthermore, we observe a dual effect of institutional quality on growth, as measured by the Rule of Law, when Oil Rents is used as a threshold variable. Specifically, improvements in institutional quality have a positive impact on growth in economies less reliant on natural resources, particularly oil. Conversely, the effect is negative in economies significantly reliant on oil exploitation. JEL Classification: C24, F43, O11

Keywords: institutions; resources dependence; human development; growth regimes; economic complexity; buffered panel threshold regression (search for similar items in EconPapers)
Date: 2025-08-22
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Published in The World Economy, inPress, ⟨10.1111/twec.70023⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05222416

DOI: 10.1111/twec.70023

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