The challenge of securing growth in times of crises: does economic complexity matter?

Younes El Khattab, Rachida El Yamani, Jihad Ait soussane and Imane Bounahr

International Review of Applied Economics, 2024, vol. 38, issue 6, 671-686

Abstract: This paper investigates the moderating role of economic complexity in mitigating the negative impact of global economic and financial crises on a country’s economic growth. Utilizing panel data from 133 countries spanning from 1998 to 2021, we employ a robust empirical methodology, considering economic growth as the dependent variable and the Economic Complexity Index (ECI) as the main moderating variable. Three dimensions of ECI, namely Trade, Technology, and Research, are meticulously analysed for their impact on economic resilience during crises. Our findings reveal a consistent negative effect of global crises on economic growth across all specifications. Significantly, economic complexity emerges as a positive moderator, implying that more complex and diversified economies experiencing less severe negative impacts. The nuanced interaction with the Human Development Index (HDI) emphasises the varying importance of economic complexity across different development levels. This study underscores the vital role of economic complexity in enhancing economic resilience during crises, offering policymakers valuable insights for fostering economic diversification, innovation, and adaptability in a dynamic global landscape.

Date: 2024
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DOI: 10.1080/02692171.2024.2382096

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