Does institutional quality foster economic complexity?
Vu, Trung V.

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Vu, T. V. (2019). Does institutional quality foster economic complexity? (Economics Discussion Papers Series No. 1909). University of Otago. Retrieved from http://hdl.handle.net/10523/9664
Permanent link to OUR Archive version:
http://hdl.handle.net/10523/9664
Abstract:
This paper examines the extent to which the quality of institutions, measured by the Economic Freedom of the World index, helps shape cross-country differences in economic complexity. To this end, I employ the intensity of ultraviolet radiation (UV-R) to isolate an exogenous source of variation in institutions, which helps circumvent endogeneity concerns. Empirical results indicate that the exogenous component of institutional quality exerts a strong and robust positive effect on economic complexity. The findings prevail after performing a battery of robustness tests. Furthermore, I find that institutions affect economic complexity by inducing human capital accumulation and providing incentives for innovative activities.
Date:
2019-10
Publisher:
University of Otago
Series number:
1909
ISSN:
1178-2293
Keywords:
Economic Complexity; Economic Freedom; Institutions; Capabilities; Productive Structures
Research Type:
Discussion Paper
Languages:
English
Collections
- Economics [316]
- Discussion Paper [439]
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