Linking Economic Complexity, Diversification, and Industrial Policy with Sustainable Development: A Structured Literature Review

Abstract

Research on economic diversification and complexity has made significant advances in understanding economic development processes, but has only recently explored environmental and social sustainability considerations. In this article we evaluate the current state of this emerging literature and reveal 13 research gaps. A total of 35 different keywords and methods from structured literature reviews and network science helped to identify 374 scientific articles between 1988 and 2020 and revealed a fragmented research landscape around three larger network communities: (1) industrial policies, climate change, and green growth; (2) economic complexity and its association with inequality and environmental sustainability; and (3) economic diversification, including studies on livelihood diversification in poor areas. Economic complexity research applies new empirical methods and considers both social and environmental sustainability, but seldom scrutinizes theory and policy. Industrial policy research focuses on green growth policies but tends to omit social sustainability issues and advanced empirical methods. Research on economic diversification in poor regions provides insights on the livelihood diversification of farmers, but is disconnected from the economic complexity and industrial policy research. This review helps to summarize the main contributions and shows pathways for potential mutual learning between these communities for the sake of sustainable development.

Urban Strategies Enabling Industrial and Urban Symbiosis: The Case of Slovenia

“…Despite some recognition of the potentials of IS as a sustainable concept in some of the development documents of Slovenia, IS is not included in the strategic spatial development documents as a direction or a measure for the efficient management of the resources on which Slovenia is dependent. Although both IS and/or UrS are already recognized as contemporary concepts in Europe [78][79][80], it is unfortunately not yet so in Slovenia. The concept of UrS is missing completely.…”

Relationship between economic diversification and CO2 emissions: ARDL-EC modeling in South Africa

“…Economic diversification is a strategy in the transformation of an economy to utilize multiple income sources spread over all sectors (UNFCCC 2016b(UNFCCC , 2016a. It aids in economic growth and reduces vulnerability to technological changes, market fluctuations, and economic crisis (Ferraz et al 2021). The primary purpose of economic diversification is to improve economic tolerance, alleviating poverty, building resilience against fluctuations in economic activity, job creation, and reducing vulnerability to income loss.…”

“…These include firm productivity, GDP per capita, exchange rate, inflation, FDI, terms of trade, population, human capital, quality of institutions and climate change policies (UNFCCC 2016b(UNFCCC , 2016a. Despite the apparent significance of economic diversification on GHS emissions, there has been a limitation in the literature that highlights the linkages between industrial policy, economic and environmental sustainability (Ferraz et al 2021).…”

“…The objective of the study was to ascertain the relationship between economic diversification and CO 2 emission in South Africa. To the best of author's knowledge, little to no studies have been carried out in South Africa that focus on the relationship between economic diversification and CO 2 emissions, even though there are global studies (Ferraz et al 2021). There is not any available study that considers South Africa in the context of economic diversification and CO 2 emissions.…”

Subnational economic complexity analysis: case-study of the Kaliningrad region

“…According to the UN 2030 Agenda, sustainable development implies the balance between social, economic and environmental spheres. One of the ways to achieve this balance is to increase the economic complexity (EC) of a country or a region [1]. According to studies, it is accompanied by reduced air pollution [2,3], decreased economic inequality [4,5] and increased human development [6], all of which is in line with the UN sustainable development goals.…”