The policy implications of economic complexity

Hidalgo, César A.

doi:10.1016/j.respol.2023.104863

Cited by 28 publications

(13 citation statements)

References 205 publications

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“…The main argument is that the type of product that a country exports matters for its subsequent economic performance (Hausmann et al, 2007). However, this new line of research is at odds with the ISI model, which advocated for import substitution rather than export promotion (Hidalgo, 2023). For these new policy approaches, the industrial policy should be developed in the context of open economies engaged in export promotion instead of import substitution (Hidalgo, 2023).…”

Section: Literature Review 21 Productive Transformation and Economic ...mentioning

confidence: 99%

Exploring the relationship between productive structure and the informal economy: evidence from Latin American countries

Salinas,

Ortiz

2024

JEPP

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Purpose The purpose of this study is to examine the relationship between the productive structure and the size of the informal economy in Latin American countries.Design/methodology/approach The study employs econometric techniques for panel data covering the period from 2002 to 2017 and considering 17 Latin American countries. The evidence presented is based on the informal economy data generated by Medina and Schneider (2018) who estimate the size of the informal economy using a structural equation model and the share of manufacturing in total employment as a measure of the size of the manufacturing sector. Also, the study addresses the possible endogeneity bias in the relationship studied and makes the conclusions more robust, thus avoiding spurious correlations that weaken the findings.Findings The results indicate that most industrialized Latin American countries are associated with a smaller size of the informal economy.Practical implications The findings have important policy implications, as they suggest that Latin American economies need to switch the structure of the economy toward more sophisticated productive structures if they want to reduce the size of the informal economy. Thus, more efforts should be deployed to policies to diversify and upgrade economies.Originality/value The study contributes to the literature on the informal economy by connecting the country’s productive structure and informality. Specifically, the results show that the productive structure of countries is a plausible explanation for the size of the informal economy.

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Section: Literature Review 21 Productive Transformation and Economic ...mentioning

confidence: 99%

Exploring the relationship between productive structure and the informal economy: evidence from Latin American countries

Salinas,

Ortiz

2024

JEPP

View full text Add to dashboard Cite

show abstract

“…The non‐aggregative nature of relatedness and complexity concepts has advanced SS policy recommendations to be custom‐made for each location and activity, creating possibilities for diversified growth paths which were previously rather global and homogeneous, such as prioritising high‐tech sectors, i.e. AI, biotechnology, regardless of regional perspective (Hidalgo, 2022). However, it is important to underline that even though the framework based on the relatedness–complexity diagram paves the way to construct an empirical SS literature, it does not account for some important aspects of the SS concept such as the entrepreneurial discovery process (Szerb et al, 2020).…”

Section: Literaturementioning

confidence: 99%

Skills for smart specialisation: Relatedness, complexity and evaluation of priorities

Buyukyazici

2023

Papers in Regional Science

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The smart specialization concept requires regions to design their strategies based on regional capabilities and strengths.The present study provides a framework to empirically integrate regional capabilities in the form of workplace knowledge and skills with the smart specialisation concept.The smart specialisation concept requires a thorough assessment of regional capabilities and strengths to be able to define region‐specific policies to reach innovation‐led growth. %However, the empirical smart specialisation literature does not explicitly account for regional capabilities even though the policy design and evaluation should ideally be drawn on them.The present study proposes a framework that is based on regional workplace knowledge and skills which are good proxies of regional capabilities. In this regard, it evaluates the smart specialisation priorities of regions with respect to their industry spaces built upon regional skill bases characterised by skill relatedness and skill complexity measures. By doing so, it analyses to what extent smart specialisation strategies are built on regional capabilities and strengths. It shows that regional heterogeneity plays an important role in the smart specialisation policy design. High income regions tend to prioritise industries in which they have enough capabilities while low income regions opt for new production paths.

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“…Although this result seems illogical, invalidating H4c, the relationship between current account balance and TEA can be explained by Rostow's theorem of stages of economic development. This theory states that developed countries in the fourth and especially in the fifth stage allocate their resources to minimum expenditures and include other countries in their economic and political spheres of influence; thus, they can maintain high current account deficits (Hidalgo, 2023;Willis, 2023;Rostow, 1960).. It is thought that countries reaching the stage of mass consumption (fifth stage) may have contributed to the development of the early entrepreneurial class, particularly as they gravitate towards advanced technology and R&D-intensive goods.…”

Section: Theoretical Implicationsmentioning

confidence: 99%

Institutions and macroeconomic indicators: entrepreneurial activities across the world

Kara,

Altinay,

Bağış

et al. 2023

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PurposeEntrepreneurial activity is a phenomenon that increases the economic growth of countries and improves their social welfare. The economic development levels of countries have significant effects on these entrepreneurial activities. This research examines which institutional and macroeconomic variables explain early-stage entrepreneurship activities in developed and developing economies.Design/methodology/approachThe authors conducted panel data analysis on the data from the Global Entrepreneurship Monitor (GEM) and International Monetary Fund (IMF) surveys covering the years 2009–2018.FindingsFirst, the authors' results reveal that cognitive, normative and regulatory institutions and macroeconomic factors affect early-stage entrepreneurial activity in developed and developing countries differently. Second, the authors' findings indicate that cognitive, normative and regulatory institutions affect early-stage entrepreneurship more positively in developed than developing countries. Finally, the authors' results report that macroeconomic factors are more effective in early-stage entrepreneurial activity in developing countries than in developed countries.Originality/valueThis study provides a better understanding of the components that help explain the differences in entrepreneurship between developed and developing countries regarding institutions and macroeconomic factors. In this way, it contributes to developing entrepreneurship literature with the theoretical achievements of combining institutional theory and macroeconomic indicators with entrepreneurship literature.

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The policy implications of economic complexity

Cited by 28 publications

References 205 publications

Exploring the relationship between productive structure and the informal economy: evidence from Latin American countries

Exploring the relationship between productive structure and the informal economy: evidence from Latin American countries

Skills for smart specialisation: Relatedness, complexity and evaluation of priorities

Institutions and macroeconomic indicators: entrepreneurial activities across the world

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