Studies on Economic Complexity, Informality, and Economic Growth in Developing Countries
| dc.contributor.author | Santaa, Francis Anyaara | |
| dc.date.accessioned | 2025-08-05T10:28:15Z | |
| dc.date.available | 2025-08-05T10:28:15Z | |
| dc.date.issued | 2025 | |
| dc.description.abstract | Empirical evidence suggests that economic complexity and informality are key drivers of economic growth, especially in developing countries, which continue to struggle to sustain high economic performance. However, there is limited empirical understanding of how economic complexity and informality affect economic growth performance in these countries. This study addresses this empirical gap by investigating the relationship between economic complexity, informality, and economic growth with four main objectives: (i) investigate the determinants of economic complexity, (ii) examine how economic complexity impacts economic growth, (iii) estimate the effects of economic complexity on informality, and (iv) examine how economic complexity influences the effect of informality on economic growth. The analysis draws on data from 102 developing countries, covering the period from 2000 to 2018. The data sources include the Atlas of Economic Complexity database, the World Bank’s World Development Indicators, the World Bank’s Prospects Group, the Centre d'Etudes Prospectives et d'Informations Internationales, Coup d’État Events, the Polity IV Project, and the World Bank World Governance Indicators. For the estimation strategy, the System Generalized Method of Moments approach was used. The findings reveal that economic growth, terms of trade, exchange rates, institutions, human capital development, and population density are the key drivers of economic complexity in developing countries. Additionally, economic complexity significantly improves economic growth in these countries, with higher levels of complexity leading to greater growth performance. Furthermore, both in the short and long term, economic complexity has a significant negative impact on informality, with improvements in economic complexity acting as a key channel for reducing the size of the informal sector. Moreover, the study shows that economic complexity mitigates the detrimental effect of informality on economic growth in developing countries. Based on these findings, the study recommends that policymakers enhance economic complexity by fostering innovation and diversification, which will help to promote economic growth directly and mitigate the detrimental effects of informality on economic growth. | |
| dc.identifier.uri | https://publication.aercafricalibrary.org/handle/123456789/4001 | |
| dc.language.iso | en_US | |
| dc.publisher | AERC | |
| dc.title | Studies on Economic Complexity, Informality, and Economic Growth in Developing Countries |