Investigating the role of economic complexity in evading the resource curse

Abstract

In order to propose a solution to the resource curse problem, the goal of this study is to evaluate the effectiveness of economic complexity. For this purpose, the effects of economic growth, capital accumulation, foreign capital, public sector size, and the economic complexity index are examined in this approach for nine economies with high resource dependence. In doing so, the period from 1995 to 2019 is investigated using second-generation panel data estimators. Additionally, the efficiency of the factors in consideration is divided into components based on the degree of resource dependency within the countries under examination using the recently created moments of quantile regression approach. Empirical investigation revealed that economic expansion and capital accumulation lessen the degree of resource dependence. On the other hand, the growth of the public sector and the inflow of foreign capital both exacerbate resource dependency. Moreover, it has been discovered that economic complexity can be a powerful tool for reducing resource dependence and the associated resource curse.