The effects of financial development on economic sophistication: evidence from panel data

Chu, Lan Khanh

doi:10.1080/13504851.2019.1676866

Cited by 38 publications

(33 citation statements)

References 21 publications

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“…Several factors have been recently advanced in the literature to explain the differences in economic complexity between countries, among which is financial development (Nguyen et al, 2020;Chu, 2020). The sophistication of the economy involves high-tech or knowledge-intensive industries, which requires huge upstream investments in the promotion and extension of innovation.…”

Section: Introductionmentioning

confidence: 99%

Is financial development shaping or shaking economic sophistication in African countries?

Njangang¹,

Asongu

Tadadjeu³

et al. 2021

SSRN Journal

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This paper aims to investigate the effect of financial development on economic complexity using a panel dataset of 24 African countries over the period 1983-2017. The empirical evidence is based on two different approaches. First, we adopt the Hoechle ( 2007) procedure which produces Driscoll-Kraay standard errors to account for heteroscedasticity and cross-sectional dependence. Second, we implement the system Generalized Method of Moments to account for endogeneity. The results show that financial development increases economic complexity in Africa. Looking at the regional difference, the results show that this effect is less beneficial for SSA countries.

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Section: Introductionmentioning

confidence: 99%

Is financial development shaping or shaking economic sophistication in African countries?

Njangang¹,

Asongu

Tadadjeu³

et al. 2021

SSRN Journal

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“…[13] Note that we have used the population density variable in replacement with the population size variable (which has been used in the studies on the determinants of export diversi cation), so as to capture more precisely both the geographic potential of countries and the size of labour (e.g., Chu, 2019;Lapatinas and Litina, 2019). We have obtained that results do not change qualitatively and quantitatively.…”

Section: Econometric Approach and Conduct Of The Empirical Exercisementioning

confidence: 99%

Effect of Productive Capacities on Economic Complexity: Do Aid for Trade flows Matter?

Gnangnon

2021

Preprint

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The COVID-19 health pandemic has exposed the strong vulnerabilities of countries, including developing ones to shocks, and underlined the need for exploring ways to strengthen countries' resilience to future shocks. The current paper uses the dataset made recently available by the United Nations Conference on Trade and Development (UNCTAD) to examine (for the first time) the effect of productive capacities on economic complexity. The analysis further investigates whether Aid for Trade (AfT) flows matter for the influence of productive capacities on economic complexity in recipient-countries. The analysis uses a sample of 126 countries (including both developed and developing countries) over the period 2002-2018, and adopts the two-step system Generalized Methods of Moments (GMM) approach. Results have shown that productive capacities exert a positive effect on economic complexity over the full sample. However, the magnitude of this positive effect varies across different sub-samples, with Least developed countries (LDCs) enjoying the lowest magnitude of this positive effect. Furthermore, total AfT flows are positively associated with economic complexity, with LDCs enjoying a higher positive effect than other countries. Interestingly, total AfT flows exert a higher positive effect on economic complexity in countries that experience low levels of overall productive capacities. The latter finding highlights the need for donor-countries to scale-up AfT flows in favour of countries (such as LDCs) that are characterized by low levels of productive capacities. Finally, the empirical outcomes indicate that productive capacities enhance economic complexity in countries that receive higher amounts of total NonAfT flows.

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“…Following previous works (e.g., Chu, 2020;Gala et al 2018;Gnangnon, 2021b;Laverde-Rojas, 2019;Nguyen and Su, 2021b;Saadi, 2020;Sweet and Maggio, 2015), we have introduced the one-period lag of the economic complexity variable as a regressor in model (1). This helps not only to capture the state dependence path of economic complexity (i.e., its persistence over time), but also to control for the omission of some variables.…”

Section: Benchmark Speci Cationmentioning

confidence: 99%

“…[36] There is a growing work on the macro-determinants of economic complexity. Existing studies include for example Chu (2020); Gala et al (2018); Gnangnon (2021b); Hausmann et al (2007); Hausmann and Hidalgo (2014); Lapatinas (2019); Lapatinas and Litina (2019); ; Laverde-Rojas and Correa (2019); Nguyen et al (2020a); Nguyen and Su (2021a;2021b); Saadi (2020); Sepehrdoust et al (2019); Sweet and Maggio (2015) and Trung (2021). See for example, Nguyen et al (2020a) for a literature review on current studies on economic complexity.…”

Section: Finally Column [2] Of Tablementioning

confidence: 99%

Effect of the Utilization of Non-Reciprocal Trade Preferences offered by the QUAD on Economic Complexity in Beneficiary Countries

Gnangnon

2021

Preprint

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This article aims to contribute to the nascent literature on the effect of non-reciprocal trade preferences (NRTPs) on industrialization in beneficiary countries. In so doing, it complements the few existing works on the effect of NRTPs on export product diversification by investigating the effect of NRTPs (both the Generalized System of Preferences- GSP programs- and other non-reciprocal trade preferences) offered by the QUAD countries on the level of economic complexity in beneficiary countries. The analysis has relied on 110 beneficiary countries of these NRTPs over the period 2002–2018, and made primarily use of the two-step system Generalized Methods of Moments estimator. The findings are quite interesting. First, beneficiary countries tend to use GSP programs (rather than other trade preferences) to achieve greater economic complexity, and the positive effect of the utilization of GSP programs on economic complexity is higher for high income beneficiary countries than relatively less advanced beneficiary countries. Second, both GSP programs and other non-reciprocal trade preferences are strongly complementary in promoting economic complexity in beneficiary countries, in particular if their usage reach high levels. Third, the utilization of NRTPs enhances economic complexity in countries that receive high foreign direct investment flows. Finally, development aid flows are strongly complementary with the utilization of NRTPs in fostering economic complexity in beneficiary countries, especially for high amounts of development aid. This suggests the need for preference-granting countries (that are also suppliers of development aid) to offer both generous NRTPs and higher development aid flows if those NRTPs are to be effective in expanding the manufacturing base in the beneficiary countries.Jel Classification: F13; F14; O14.

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The effects of financial development on economic sophistication: evidence from panel data

Cited by 38 publications

References 21 publications

Is financial development shaping or shaking economic sophistication in African countries?

Is financial development shaping or shaking economic sophistication in African countries?

Effect of Productive Capacities on Economic Complexity: Do Aid for Trade flows Matter?

Effect of the Utilization of Non-Reciprocal Trade Preferences offered by the QUAD on Economic Complexity in Beneficiary Countries

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