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The Dynamics of Export Diversification, Economic Complexity and Economic Growth Cycles: Global Evidence

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  • Nguyen Phuc Canh
  • Su Dinh Thanh
Abstract
This article investigates the dynamics of export diversification, economic complexity and economic growth cycles. By applying several econometric techniques for estimating a panel data set of 70 economies over the period from 1996 to 2014, the results have been threefold. First , there is Granger bi-directional causality between economic complexity and export diversification, while unidirectional Granger causality exists from economic complexity to economic growth cycles. Second , the result attained from the three-stage least squares estimate demonstrates that economic complexity and export diversification significantly impact each other. Notably, the effect of economic complexity is found to be negative on economic growth cycles, implying that the dynamics of economic complexity and export diversification generate a reduction in economic fluctuations. Third , by splitting the sample into two subsamples (i.e., 32 high-income economies and 38 low- and middle-income economies) and two sub-periods (i.e., 1994–2007 and 2008–2014), the results show that the positive dynamics between economic complexity and export diversification are consistent with income levels and time periods. However, the negative impact of economic complexity on economic growth cycles is statistically significant only for the group of high-income economies and during the 1996–2007 period. These findings are checked by several estimators and different proxies of export diversification, economic growth cycles and economic complexity. JEL: F13, F14, O19, E32

Suggested Citation

  • Nguyen Phuc Canh & Su Dinh Thanh, 2022. "The Dynamics of Export Diversification, Economic Complexity and Economic Growth Cycles: Global Evidence," Foreign Trade Review, , vol. 57(3), pages 234-260, August.
    • Handle: RePEc:sae:fortra:v:57:y:2022:i:3:p:234-260
    DOI: 10.1177/0015732520970441
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    More about this item

    Keywords

    Economic complexity; export diversification; economic cycle; economic linkages;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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