Economic complexity, structural transformation and economic growth in a regional context: Evidence for Brazil
DOI:
https://doi.org/10.13133/2037-3643/17505Keywords:
Economic complexity, Federative units, Productive transformationAbstract
The purpose of this paper is to verify the effect of economic complexity on the growth and productive transformation of federative units (UFs) in Brazil between 2003 and 2014. We also analyze the factors that determine the economic complexity of these subnational entities. To do this we used different indices of economic complexity (linear and non- linear), as well as system generalized method of moments (GMM-SYS) estimators in dynamic panels to avoid endogeneity problems. The results showed that: i) through the descriptive analysis (both by the linear and the non- linear versions) a positive relationship between the UFs’ economic complexity and economic growth was observed; ii) the econometric analysis showed that measures of economic complexity are positively related to economic growth – however, some of the coefficients did not show statistical significance and the coefficients that represent the non- linear approach showed weak correlation; iii) there is a positive relationship between the real exchange rate at the state level (R$/US$) and the UFs’ productive transformation, such as between the UFs’ productive transformation and the economic complexity.
References
Albeaik S., Kaltenberg M., Alsaleh M. and Hidalgo C.A. (2017), “Improving the Economic Complexity Index”, available at: https://arxiv.org/abs/1707.05826.
Arellano M. and Bond S.R. (1991), “Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations”, The Review of Economic Studies, 58 (2), pp. 277-297.
Arellano M. and Bover O. (1995), “Another look at the instrumental variable estimation of error-components models”, Journal of Econometrics, 68 (1), pp. 29-51.
Arthur W.B. (1989), “Competing Technologies, Increasing Returns, and Lock-In by Historical Events”, Economic Journal, 99, pp. 116-131.
Arthur W.B. (2006), “Out-of-Equilibrium Economics and Agent-Based Modeling”, in Tesfatsion L. and Judd K. (eds.), Handbook of Computational Economics, 1st ed., 2 (32), Elsevier, pp. 1551-1564.
Arthur W.B. (2015), Complexity and the Economy, New York: Oxford University Press.
Balassa B. (1965), “Trade liberalisation and ‘revealed’ comparative advantage”, The Manchester School, 33 (2), pp. 99-123.
Balsalobre S.P., Verduras C.L. and Diaz-Lanchas J. (2019), “Measuring subnational economic complexity: An application with Spanish data”, JRC Working Papers on Territorial Modelling and Analysis, n. 05/2019, Seville: European Commission.
Banco Central do Brasil, n.d., at: https://www.bcb.gov.br/estatisticas/dadoshistoricos
Beinhocker E.D. (2006), The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics, Boston: Harvard Business School Press
Blundell R. and Bond S. (1998), “Initial conditions and moment restrictions in dynamic panel data models”, Journal of Econometrics, 87, pp. 115-143.
Caglayan M. and Demir F. (2019), “Exchange rate movements, export sophistication and direction of trade: the development channel and North-South trade flows", Cambridge Journal of Economics, 43, pp. 1623-1652.
Caldarelli G., Cristelli M., Gabrielli A., Pietronero L., Scala A. and Tacchella A. (2012), “A Network Analysis of Countries’ Export Flows: Firm Grounds for the Building Blocks of the Economy”, PLOS ONE, 7 (10), pp. 1-11.
Cameron A.C. and Trivedi P.K. (2005), Microeconometrics: Methods and Applications, New York: Cambridge University Press.
Coniglio N.D., Lagravinese R. and Vurchio D. (2016), “Production sophisticatedness and growth: evidence from Italian provinces before and during the crisis, 1997-2013”, Cambridge Journal of Regions, Economy and Society, 9 (2), pp. 423-442.
Cristelli M., Tacchella A. and Pietronero L. (2015), “The Heterogeneous Dynamics of Economic Complexity”, PLOS ONE, 10 (2), pp. 1-15.
Da Silva A.D.B. and Hidalgo A.B (2016), “Sofisticação da produção: determinantes e impactos sobre o crescimento econômico dos estados brasileiros”, presented at the Anais do XLIII Encontro Nacional de Economia [43rd Brazailian Economic Meeting] (ANPEC).
Demir F. and Razmi A. (2021), “The real exchange rate and development theory, evidence, issues and challenges”, Journal of Economic Surveys, special issue, pp. 1-43, https://doi.org/10.1111/joes.12418.
DIEESE – Departamento Intersindical de Estatística e Estudos Socioeconômicos, n.d., at: https://www.dieese.org.br/
Felipe J., Kumar U., Abdon A. and Bacate M. (2012), “Product complexity and economic development”, Structural Change and Economic Dynamics, 23 (1), pp. 36-68.
Gabriel L.F. and Missio F.J. (2018), “Real exchange rate and economic complexity in a North-South structuralist BoPG model” PSL Quarterly Review, 71 (287), pp. 439-465.
Gala P. (2017), Complexidade econômica: Uma nova perspectiva para entender a antiga questão da riqueza das nações, Rio de Janeiro: Contraponto Editora Ltda.
Gómez-Zaldívar, M., Chávez, J. C. and Marco T. (2017) "Economic complexity and regional growth performance: Evidence from the Mexican Economy." Review of Regional Studies 47.2, pp. 201-219.
Hamilton J.D. (2018), “Why you should never use the Hodrick-Prescott filter”, Review of Economics and Statistics, 100 (5), pp. 831-843.
Hartmann D., Guevara M.R., Jara-Figueroa C., Aristarán M. and Hidalgo C.A. (2017), “Linking Economic Complexity, Institutions, and Income Inequality”, World Development, 93, pp. 75-93.
Hausmann R. and Hidalgo C. (2010), “Country Diversification, Product Ubiquity, and Economic Divergence”, HKS Faculty Research Working Paper, n. RWP10-045, Cambridge, MA: Harvard Kennedy School.
Hausmann R. and Hidalgo C.A. (2011), “The network structure of economic output”, Journal of Economic Growth, 16, pp. 309-342.
Hausmann R., Hidalgo C.A., Bustos S., Coscia M., Simoes A. and Yıldırım M.A. (2013), The Atlas of Economic Complexity: Mapping Paths to Prosperity, Cambridge (MA): The MIT Press.
Hausmann R., Hwang J. and Rodrik D. (2007), “What you export matters”, Journal of Economic Growth, 12, pp. 1-25.
Herrera W.D.M., Strauch J.C.M. and Bruno M.A.P. (2021), “Economic complexity of Brazilian states in the period 1997-2017”, Area Development and Policy, 6, pp. 63-81.
Hidalgo C.A. (2015), Why information grows: The evolution of order, from atoms to economies, New York: Basic Books.
Hidalgo C.A. (2021), “Economic complexity theory and applications”, Nature Reviews Physics, 3, pp. 92-113.
Hidalgo C.A. and Hausmann R. (2009), “The building blocks of economic complexity”, Proceedings of the National Academy of Sciences of the United States of America, 106 (26), pp. 10570-10575.
Holtz-Eakin D., Newey W. and Rosen H. (1988), “Estimating Vector Autoregressions with Panel Data”, Econometrica, 56, pp. 1371-1395.
IBGE – Instituto Brasileiro de Geografia e Estatística (Brazilian Institute of Geography and Statistics) (2020), at: https://www.ibge.gov.br/
IMF Data, n.d, Washington (DC): International Monetary Fund, at: https://www.imf.org/en/Data
Inoua S.A. (2016), “A Simple Measure of Economic Complexity”, at: https://arxiv.org/abs/1601.05012
IPEA – Instituto de Pesquisa Econômica Aplicada, n.d., at: https://www.ipea.gov.br/portal/
Ivanova I., Strand Ø. and Leydesdorff L. (2019), “An Eco-Systems Approach to Constructing Economic Complexity Measures: Endogenization of the Technological Dimension Using Lotka-Volterra Equations”, Advances in Complex Systems, 22 (1), 1850023, https://doi.org/10.1142/S0219525918500236
Ivanova I., Smorodinskaya N. and Leydesdorff L. (2020), “On measuring complexity in a post-industrial economy: the ecosystem’s approach”, Quality & Quantity, 54, pp. 197-212.
Jarreau J. and Poncet S. (2009), “Export Sophistication and Economic Performance: evidence from Chinese provinces”, Document de Travail, n. 2009 – 34, Paris: Centre d’Etudes Prospectives et d’Informations Internationales.
Kume H., Piani G. and Miranda P. (2012), “O grau de sofisticação relativa das exportações brasileiras”, Texto para Discussão, n. 1792, Brasilia: Instituto de Pesquisa Econômica Aplicada (IPEA).
Marconi N., Araujo E., Brancher M.C. and Porto T.C. (2021), “The relationship between exchange rate and structural change: an approach based on income elasticities of trade”, Cambridge Journal of Economics, 45 (6), pp. 1297-1318.
Mitchell M. (2009), Complexity: A guided tour, New York: Oxford University Press.
Morais M.B., Swart J. and Jordaan J.A. (2021), “Economic Complexity and Inequality: Does Regional Productive Structure Affect Income Inequality in Brazilian States?”, Sustainability, 13 (2), https://doi.org/10.3390/su13021006
Nelson R.R. and Winter S.G. (1982), An Evolutionary Theory of Economic Change, Cambridge, MA and London: The Belknap Press of Harvard University Press.
Operti F.G., Pugliese E., Andrade J.S., Pietronero L. and Gabrielli A. (2018), “Dynamics in the Fitness-Income plane: Brazilian states vs World countries”, PLOS ONE, 13 (6), e0197616, at: https://doi.org/10.1371/journal.pone.0197616
Oreiro J.L., D’Agostini L. and Gala P. (2020), “Deindustrialization, economic complexity and exchange rate overvaluation: The case of Brazil (1998-2017)”, PSL Quarterly Review, 73 (295), pp. 313-341.
Poncet S. and De Waldemar F.S. (2013), “Economic Complexity and Growth: Evidence from China”, Revue Économique, 64 (3), pp. 495-503.
PWT 10.0, Penn World Table version 10.0, Groningen Growth and Development Centre, University of Groningen, n.d., at: https://www.rug.nl/ggdc/productivity/pwt/?lang=en
Rodrik D. (2008), “The Real Exchange Rate and Economic Growth”, Brookings Papers on Economic Activity, 39 (2), pp. 365-439.
Roodman D. (2009), “How to do xtabond2: An introduction to difference and system GMM in Stata”, The Stata Journal, 9 (1), pp. 86-136.
Sciarra C., Chiarott G., Ridolfi L. and Laio F. (2020), “Reconciling contrasting views on economic complexity”, Nature Communications, 11 (3352), pp. 1-10.
SECEX, Secretariat of Foreign Trade (Secretaria de Comércio Exterior, SECEX) n.d., Siscomex, at: http://www.siscomex.gov.br/legislacao/secex/
Subramanian A., Ostry J.D. and Johnson S. (2007), “The Prospects for Sustained Growth in Africa: Benchmarking the Constraints”, NBER Working Paper Series, n. 13120, Cambridge (MA): National Bureau of Economic Research.
Tacchella A., Cristelli M., Caldarelli G., Gabrielli A. and Pietronero L. (2012), “A New Metrics for Countries’ Fitness and Products’ Complexity”, Scientific Reports, 2 (723), pp. 1-7.
Tacchella A., Cristelli M., Caldarelli G., Gabrielli A. and Pietronero L. (2013), “Economic complexity: Conceptual grounding of a new metrics for global competitiveness”, Journal of Economic Dynamics and Control, 37 (8), pp. 1683-1691.
UN Comtrade, International Trade Statistics Database, n.d., at: https://comtrade.un.org/
Verheij T. and De Oliveira H. (2020), “Is economic complexity spatially dependent? A spatial analysis of interactions of economic complexity between municipalities in Brazil”, Revista Brasileira de Gestão e Desenvolvimento Regional, 16 (1), https://www.rbgdr.net/revista/index.php/rbgdr/article/view/5383.
Windmeijer, F. (2005). A finite sample correction for the variance of linear efficient two-step GMM estimators. Journal of econometrics, 126(1), pp. 25-51.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2022 Felipe Orsolin Teixeira, Fabricio José Missio, Ricardo Dathein
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
