Does domestic investment spur economic complexity? Effects and transmission channels

Marietta Yilen (), Mekam Pouatcha Mathurin Aimé () and Ethel Selamo ()
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Marietta Yilen: University of Bamenda
Mekam Pouatcha Mathurin Aimé: University of Bamenda
Ethel Selamo: University of Bamenda

Economics Bulletin, 2025, vol. 45, issue 3, 1240 - 1259

Abstract: This paper presents the first large-scale study examining the impact of domestic investment on economic complexity, using a dataset of 84 countries spanning four decades (1980-2019). By employing a range of estimation techniques, including SGMM, dynamic panel threshold models, and quantile regression methods, we establish several key findings. First, domestic investment promotes economic complexity above a certain threshold. Second, the nonlinear relationship between domestic investment and economic complexity is influenced by the levels of corruption and socio-economic conditions. Third, we identify economic growth, health, and education as key channels through which domestic investment affects economic complexity. Our results are robust across alternative specifications, methodologies, business cycle fluctuations, and levels of economic development. This study highlights the importance of adopting strategies that enhance domestic investment, reduce corruption, and improve socio-economic conditions to fully leverage the benefits of domestic investment on economic complexity

Keywords: Domestic investment; economic complexity; corruption; socio-economic conditions (search for similar items in EconPapers)
JEL-codes: C5 O1 (search for similar items in EconPapers)
Date: 2025-09-30
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