This paper analyzes the effects of knowledge spillovers and complexity proxies on the economic growth using the pooled mean group estimator and annual dataset of 86 countries for the period of 1995-2011. Differently, we cluster countries into five groups by development stages, according to the key drivers of their economies. To this end, along with the conventional determinants, we also added foreign direct investment inflows as proxy of potential knowledge spillovers, and economic complexity index that represents overall capabilities of the economy to amass the knowledge and deepen the technology. Results affirm that long-run relationships vary substantially across the country groups. Complexity contributes to the growth most for the countries that are moving into innovation-driven stage while innovation-driven economies seem to have already faced negative consequences of complexity. Adverse effects of FDI inflows indicate possible resource-seeking activities and crowding-out effects for resource-driven and efficiency-driven countries, respectively.
Knowledge, Complexity and Economic Growth: Multi-country Evidence by Development Stages (806.4 KiB, 505 hits)