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.
Highlights
Since the seminal work of Hidalgo et al [1] and Hidalgo and Hausmann [2], a considerable body of literature has explored the economic complexity of countries and regions [3,4,5]and has shown how the network structure of production and type of economic activities condition economic growth and future diversification of economies
Before systematizing the literature empirically, we summarize some of the main ideas and motivations of the different strands of literature in economic diversification and sophistication in connection with sustainability
We found 11 clusters distributed among economic complexity, industrial policy, industrial diversification, and rural diversification analyzing social and environmental sustainability
Summary
Since the seminal work of Hidalgo et al [1] and Hidalgo and Hausmann [2], a considerable body of literature has explored the economic complexity of countries and regions [3,4,5]and has shown how the network structure of production and type of economic activities condition economic growth and future diversification of economies. We intend to summarize how the main research fields related to economic diversification and sophistication processes address social and environmental sustainability considerations. We apply a broad perspective on economic complexity by including previous and ongoing research efforts on economic diversification, relatedness, and industrial policies that address questions of social and environmental sustainability. While different research communities can be identified within the broader field of economic diversification and sophistication, they have strong common grounds, such as (1) emphasizing the need of moving beyond aggregate growth towards the quality of economic development, (2) pointing to the vulnerabilities of economic systems specialized in few low-value added activities, (3) highlighting the importance of knowledge-intensive activities, and (4) analyzing whether, how, why, and when these activities can be achieved
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