IDEAS home Printed from https://ideas.repec.org/p/zbw/ipewps/323944.html
   My bibliography  Save this paper

Economic complexity and financial development: A multilayered analysis of the European Union

Author

Listed:
  • Zechlin, Linus

Abstract

The economic complexity framework by César Hidalgo and Ricardo Hausmann has inspired a substantial body of literature throughout recent years. Following previous research, which explored the various drivers of economic complexity, this article contributes by exploring the interplay with financial development. For the base sample of the European Union, a positive effect of financial development on economic complexity is found, identifying the financial institutions channel as the strongest driver of the Economic Complexity Index. Critical reflection leads to the assumption that a holistic replication of the study on a global scale could retrieve non-linear characteristics of said relationship.

Suggested Citation

  • Zechlin, Linus, 2025. "Economic complexity and financial development: A multilayered analysis of the European Union," IPE Working Papers 258/2025, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    • Handle: RePEc:zbw:ipewps:323944
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/323944/1/1933101911.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ejike Udeogu & Shampa Roy-Mukherjee & Uzochukwu Amakom, 2021. "Does Increasing Product Complexity and Diversity Cause Economic Growth in the Long-Run? A GMM Panel VAR Evidence," SAGE Open, , vol. 11(3), pages 21582440211, August.
    2. Romero, João P. & Gramkow, Camila, 2021. "Economic complexity and greenhouse gas emissions," World Development, Elsevier, vol. 139(C).
    3. Amel, Dean & Barnes, Colleen & Panetta, Fabio & Salleo, Carmelo, 2004. "Consolidation and efficiency in the financial sector: A review of the international evidence," Journal of Banking & Finance, Elsevier, vol. 28(10), pages 2493-2519, October.
    4. Hsu, Po-Hsuan & Tian, Xuan & Xu, Yan, 2014. "Financial development and innovation: Cross-country evidence," Journal of Financial Economics, Elsevier, vol. 112(1), pages 116-135.
    5. Cesar A. Hidalgo & Ricardo Hausmann, 2009. "The Building Blocks of Economic Complexity," Papers 0909.3890, arXiv.org.
    6. Stephen Cecchetti & Enisse Kharroubi, 2012. "Reassessing the impact of finance on growth," BIS Working Papers 381, Bank for International Settlements.
    7. C. A. Hidalgo & B. Klinger & A. -L. Barabasi & R. Hausmann, 2007. "The Product Space Conditions the Development of Nations," Papers 0708.2090, arXiv.org.
    8. Lan Khanh Chu, 2020. "The effects of financial development on economic sophistication: evidence from panel data," Applied Economics Letters, Taylor & Francis Journals, vol. 27(15), pages 1260-1263, September.
    9. Acheampong, Alex O. & Amponsah, Mary & Boateng, Elliot, 2020. "Does financial development mitigate carbon emissions? Evidence from heterogeneous financial economies," Energy Economics, Elsevier, vol. 88(C).
    10. Esho, Neil, 2001. "The determinants of cost efficiency in cooperative financial institutions: Australian evidence," Journal of Banking & Finance, Elsevier, vol. 25(5), pages 941-964, May.
    11. Shujin Zhu & Renyu Li, 2017. "Economic complexity, human capital and economic growth: empirical research based on cross-country panel data," Applied Economics, Taylor & Francis Journals, vol. 49(38), pages 3815-3828, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Henri Njangang & Youssouf Nvuh-Njoya, 2023. "Unravelling the link between democracy and economic complexity: fresh evidence from the Varieties of Democracy data," SN Business & Economics, Springer, vol. 3(3), pages 1-32, March.
    2. Diogo Ferraz & Fernanda P. S. Falguera & Enzo B. Mariano & Dominik Hartmann, 2021. "Linking Economic Complexity, Diversification, and Industrial Policy with Sustainable Development: A Structured Literature Review," Sustainability, MDPI, vol. 13(3), pages 1-29, January.
    3. Mohamad Taghvaee, Vahid & Saboori, Behnaz & Soretz, Susanne & Magazzino, Cosimo & Tatar, Moosa, 2024. "Renewable energy, energy efficiency, and economic complexity in the middle East and North Africa: A panel data analysis," Energy, Elsevier, vol. 311(C).
    4. Nguyen, Canh Phuc, 2022. "Does economic complexity matter for the shadow economy?," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 210-227.
    5. Henri Njangang & Simplice A. Asongu & Sosson Tadadjeu & Yann Nounamo, 2021. "Is financial development shaping or shaking economic sophistication in African countries?," Working Papers of the African Governance and Development Institute. 21/018, African Governance and Development Institute..
    6. Kamguia, Brice & Tadadjeu, Sosson & Miamo, Clovis & Njangang, Henri, 2022. "Does foreign aid impede economic complexity in developing countries?," International Economics, Elsevier, vol. 169(C), pages 71-88.
    7. Trung V. Vu, 2022. "Does institutional quality foster economic complexity? The fundamental drivers of productive capabilities," Empirical Economics, Springer, vol. 63(3), pages 1571-1604, September.
    8. Ben Saad, Myriam & Brahim, Mariem & Schaffar, Alexandra & Guesmi, Khaled & Ben Saad, Rym, 2023. "Economic complexity, diversification and economic development: The strategic factors," Research in International Business and Finance, Elsevier, vol. 64(C).
    9. Hermann Ndoya & Bruno Emmanuel Ongo Nkoa & Francis Hypolite Kemeze & Tii N. Nchofoung, 2024. "Financial development and economic complexity: The role of country stability," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 32(2), pages 415-447, April.
    10. Nguyen, Canh Phuc, 2021. "Gender equality and economic complexity," Economic Systems, Elsevier, vol. 45(4).
    11. Denninger, Jan & Kaplan, Lennart, 2025. "The great equalizer: Effects of Chinese official finance on economic complexity across recipient countries," Kiel Working Papers 2281, Kiel Institute for the World Economy (IfW Kiel).
    12. Balland, Pierre-Alexandre & Broekel, Tom & Diodato, Dario & Giuliani, Elisa & Hausmann, Ricardo & O'Clery, Neave & Rigby, David, 2022. "Reprint of The new paradigm of economic complexity," Research Policy, Elsevier, vol. 51(8).
    13. Vu, Trung V., 2020. "Economic complexity and health outcomes: A global perspective," Social Science & Medicine, Elsevier, vol. 265(C).
    14. Ondřej Sankot & Tereza De Castro & Jana Vlčková & Cristina Procházková Ilinitchi, 2023. "Mapping of Capabilities and Export Opportunities of Czechia," Prague Economic Papers, Prague University of Economics and Business, vol. 2023(2), pages 159-183.
    15. Hidalgo, César A., 2023. "The policy implications of economic complexity," Research Policy, Elsevier, vol. 52(9).
    16. Rui Xue & KeYu Li & FeiFei Wang & Claude Baron, 2024. "Research Progress and Hot-spot Analysis of The Economic Complexity Research Based on CiteSpace," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 14(1), pages 1-10.
    17. Canh Phuc Nguyen & Thanh Dinh Su, 2021. "Financing the economy: The multidimensional influences of financial development on economic complexity," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(4), pages 644-684, May.
    18. Florian Bucher & Lucas Scheu & Benedikt Schröpf, 2022. "Economic complexity and environmental pollution: Evidence from the former socialist transition countries," Working Papers 218, Bavarian Graduate Program in Economics (BGPE).
    19. Sebastian Montagna & Liqiao Huang & Yin Long & Yoshikuni Yoshida, 2025. "Sectoral economic complexity and environmental degradation: a sectoral perspective on the EKC hypothesis," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-24, December.
    20. Athanasios Lapatinas & Anastasia Litina & Skerdilajda Zanaj, 2024. "The relationship between knowledge accumulation and gender norms," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 11(1), pages 1-11, December.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:ipewps:323944. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/iphwrde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.