Economic Complexity and Growth: Can value-added exports better explain the link?

Philipp Koch

Papers from arXiv.org

Abstract: In economic literature, economic complexity is typically approximated on the basis of an economy's gross export structure. However, in times of ever increasingly integrated global value chains, gross exports may convey an inaccurate image of a country's economic performance since they also incorporate foreign value-added and double-counted exports. Thus, I introduce a new empirical approach approximating economic complexity based on a country's value-added export structure. This approach leads to substantially different complexity rankings compared to established metrics. Moreover, the explanatory power of GDP per capita growth rates for a sample of 40 lower-middle- to high-income countries is considerably higher, even if controlling for typical growth regression covariates.

Date: 2020-09, Revised 2020-11
New Economics Papers: this item is included in nep-int
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Journal Article: Economic complexity and growth: Can value-added exports better explain the link? (2021)
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