Investigation of the relationship between economic complexity level and human development level: comparison of developed and developing countries

Abstract

Purpose- The purpose of this study is to examine whether there is a difference between developed and developing countries in terms of the relationship between economic complexity level and human development level. Examining whether there is a long-term relationship between these two variables constitutes the main motivation of the study.Methodology- In the present study, Bai and Carrion-I-Silvestre cointegration test has been applied to the data for G20 countries within the period from 1992 to 2017.Findings- For all countries except the US, HDI has an impact on the ECI. The impact of HDI on ECI is negative in Germany, France, United Kingdom, Italy and Japan while it is positive in other countries. According to these results; in developed countries except Canada and Australia, human development has a negative impact on economic complexity level.Conclusion- Results mean that improvements in indicators such as education, health, etc. in developing G20 countries develop human development level, and this development increases the sophistication of the economy; the quality of the products produced and exported by countries is developing to reflect the ability to use more complex knowledge together.Keywords: Economic complexity level, human development level, panel data analysiss, panel cointegration analysis