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Economic Complexity and the Mediating Effects of Income Inequality: Reaching Sustainable Development in Developing Countries

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  • Emilie Le Caous

    (College of Business, Southern Taiwan University of Science and Technology (STUST), No.1, Nantai Street, Yongkang District, Tainan 71005, Taiwan)

  • Fenghueih Huarng

    (Department of Business Administration, Southern Taiwan University of Science and Technology, No.1, Nantai Street, Yongkang District, Tainan 71005, Taiwan)

Abstract

According to the United Nations Development Program, sustainable development goals are fundamental for attaining a better and more sustainable future for all of us, and are a primary concern today. New indicators, such as the Economic Complexity Index (i.e., ECI), can be used to predict human development index (i.e., HDI). To be defined as a complex economy, a country, through a vast network of individuals, should be able to interlink extensive quantities of relevant knowledge to create diversified products. Political, cultural, and environmental factors should also be included in this model to improve the measurement of human development. This paper aimed to study the relationship between the ECI and HDI and the mediating effects of income inequality among developing countries. Hierarchical linear modeling was used as a statistical tool to analyze 87 developing countries from 1990 to 2017, which also studied the country-level effects of gender inequality and energy consumption. Different year lags were used for more robustness. The results show that human development increased with higher economic complexity. This relationship was, however, partially mediated by income inequality. Country-level predictors, gender inequality, and energy consumption also impacted sustainable development. Finally, it is essential to note that this model cannot be applied to developed economies.

Suggested Citation

  • Emilie Le Caous & Fenghueih Huarng, 2020. "Economic Complexity and the Mediating Effects of Income Inequality: Reaching Sustainable Development in Developing Countries," Sustainability, MDPI, vol. 12(5), pages 1-26, March.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:5:p:2089-:d:330076
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    Cited by:

    1. Chu, Lan Khanh & Hoang, Dung Phuong, 2020. "How does economic complexity influence income inequality? New evidence from international data," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 44-57.
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    3. Dominik Hartmann & Flavio L. Pinheiro, 2022. "Economic complexity and inequality at the national and regional level," Papers 2206.00818, arXiv.org, revised Jun 2022.
    4. Nano Prawoto & Agus Tri Basuki, 2020. "Effect of Macroeconomic Indicators and CO2 Emission on Indonesian Economic Growth," International Journal of Energy Economics and Policy, Econjournals, vol. 10(6), pages 354-358.
    5. Bryan Rivera & Marcelo Leon & Gino Cornejo & Hector Florez, 2023. "Analysis of the Effect of Human Capital, Institutionality and Globalization on Economic Complexity: Comparison between Latin America and Countries with Greater Economic Diversification," Economies, MDPI, vol. 11(8), pages 1-16, July.
    6. Egla Mansi & Eglantina Hysa & Mirela Panait & Marian Catalin Voica, 2020. "Poverty—A Challenge for Economic Development? Evidences from Western Balkan Countries and the European Union," Sustainability, MDPI, vol. 12(18), pages 1-24, September.
    7. Gnangnon, Sèna Kimm, 2022. "Effect of the utilization of non-reciprocal trade preferences offered by the QUAD countries on beneficiary countries' economic complexity," Journal of the Japanese and International Economies, Elsevier, vol. 65(C).
    8. Lingfu Kong & Emrah Sofuoğlu & Balogun Daud Ishola & Shujaat Abbas & Qingran Guo & Khurshid Khudoykulov, 2024. "Sustainable development through structural transformation: a pathway to economic, social, and environmental progress," Economic Change and Restructuring, Springer, vol. 57(2), pages 1-34, April.
    9. Teen-Hang Meen & Charles Tijus & Jui-Che Tu, 2020. "Selected Papers from the Eurasian Conference on Educational Innovation 2020," Sustainability, MDPI, vol. 12(15), pages 1-5, July.
    10. Manuel Gómez‐Zaldívar & María Isabel Osorio‐Caballero & Edgar Juan Saucedo‐Acosta, 2022. "Income inequality and economic complexity: Evidence from Mexican states," Regional Science Policy & Practice, Wiley Blackwell, vol. 14(6), pages 344-363, December.
    11. Emilie Sophie Le Caous & Fenghueih Huarng, 2021. "Economic Complexity and Human Development: Moderated by Logistics and International Migration," Sustainability, MDPI, vol. 13(4), pages 1-23, February.

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