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Research on productive structures has shown that economic complexityconditions economic growth. However, little is known about which type ofcomplexity, e.g., export or industrial complexity, matters more for regionaleconomic growth in a large emerging country like Brazil. Brazil exports naturalresources and agricultural goods, but a large share of the employment derivesfrom services, non-tradables, and within-country manufacturing trade. Here, weuse a large dataset on Brazil's formal labor market, including approximately100 million workers and 581 industries, to reveal the patterns of exportcomplexity, industrial complexity, and economic growth of 558 micro-regionsbetween 2003 and 2019. Our results show that export complexity is more evenlyspread than industrial complexity. Only a few -- mainly developed urban places-- have comparative advantages in sophisticated services. Regressions show thata region's industrial complexity is a significant predictor for 3-year growthprospects, but export complexity is not. Moreover, economic complexity inneighboring regions is significantly associated with economic growth. Theresults show export complexity does not appropriately depict Brazil's knowledgebase and growth opportunities. Instead, promoting the sophistication of theheterogeneous regional industrial structures and development spillovers is akey to growth.

Export complexity, industrial complexity and regional economic growth in Brazil