Open AccessEconomic Complexity and Sustainable Growth in Developing Countries
Author(s) -
Lilis Hoeriyah,
Nunung Nuryartono,
Syamsul Hidayat Pasaribu
Publication year - 2022
Publication title -
economics development analysis journal/economics development analysis journal
Language(s) - English
Resource type - Journals
eISSN - 2502-2725
pISSN - 2252-6560
DOI - 10.15294/edaj.v11i1.47294
Subject(s) - developing country , human capital , economics , generalized method of moments , estimation , government (linguistics) , economic expansion , sustainable growth rate , panel data , economic sector , development economics , economic growth , macroeconomics , econometrics , economy , linguistics , philosophy , management , finance
Most developing countries in this study are middle to low-income countries that have a relatively low economic complexity. This study aims to analyze the effect of the economic complexity on economic growth in 86 developing countries in 2010-2019. The method used is the Generalized Method of Moments (GMM) to capture dynamic panel analysis. The estimation results using the System GMM show that economic complexity has a positive effect on economic growth in developing countries. Increasing economic complexity encourages a structural transformation through high value-added economic sectors' creation to produce more complex products for earning a higher income. Human capital does not have a significant effect on economic growth because developing countries have relatively low-quality workers both in terms of education and health. The human capital development and government spending on the health sector are necessary to accelerate sustainable economic growth.