SavedAdd your journal

Journals / Afyon Kocatepe Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi / 2025 / Cilt: 27 Sayı: 2

The effect of institutional quality on economic complexity: Findings from OECD countries

Kurumsal kalitenin ekonomik karmaşıklık üzerindeki etkisi: OECD üyesi ülkelerden kanıtlar

Efe Can Kılınç
Nazan Şahbaz Kılınç
Pages
406–420
Publication Date
2025-12-05
🏛️Bibliographic metadata and full text access for this article are provided via DergiPark.
DergiPark Record ↗
✨

AI Summary & Key Takeaways

AI Insight
⚡ TL;DR(Too Long; Didn't Read)

According to the findings obtained from the analysis using data for the period 2000–2021, increases in economic freedom, the legal system and property rights, freedom to trade internationally, and regulation indices have a positive effect on the level of economic complexity.

📌 3 Key Takeaways

🎯
Objective & Hypothesis:Economic complexity reflects the diversity and sophistication of the products that a country produces and exports.
📊
Key Findings & Data:The role of institutional quality is significant in enhancing the level of economic complexity across countries.
💡
Conclusion & Impact:According to the findings obtained from the analysis using data for the period 2000–2021, increases in economic freedom, the legal system and property rights, freedom to trade internationally, and regulation indices have a positive effect on the level of economic complexity.
🔬Design:Araştırma Makalesi
📍Scope:2000–2021 Verileri
⚙️Variables:Kurumsal Kalite · Ekonomik Karmaşıklık · Panel Veri Analizi

Abstract

Economic complexity reflects the diversity and sophistication of the products that a country produces and exports. The role of institutional quality is significant in enhancing the level of economic complexity across countries. In countries with strong institutions—where property rights are protected, legal contracts and regulations are effectively enforced, uncertainty is reduced, trust is strengthened, economic freedoms are safeguarded, access to finance is facilitated, and trade barriers are minimized—institutional quality tends to be high. In such environments, institutional quality fosters developments that contribute to higher levels of economic complexity, such as the promotion of entrepreneurship, innovation, and the accumulation of human capital. Based on the critical role of institutions in shaping economic complexity, this study investigates the impact of institutional quality indicators on the level of economic complexity using panel data methods, specifically the Common Correlated Effects (CCE) estimator. According to the findings obtained from the analysis using data for the period 2000–2021, increases in economic freedom, the legal system and property rights, freedom to trade internationally, and regulation indices have a positive effect on the level of economic complexity.

Özet

Ekonomik karmaşıklık, bir ülkenin ürettiği ve ihraç ettiği malların çeşitliliğini yansıtan önemli bir göstergedir. Ülkelerin ekonomik karmaşıklık düzeylerinin artırılmasında kurumsal kalitenin belirleyici bir rol oynadığı görülmektedir. Mülkiyet haklarının güvence altına alındığı, sözleşmelerin etkin biçimde uygulandığı, düzenlemeler aracılığıyla belirsizliğin azaltıldığı ve ekonomik özgürlüklerin korunduğu ülkelerde kurumsal yapıların güçlü olduğu söylenebilir. Ayrıca bu ülkelerde finansmana erişimin kolay olması ve ticaretin önündeki engellerin kaldırılması da kurumsal kalitenin yüksekliğine işaret etmektedir. Kurumsal kalitenin yüksek olduğu ortamlarda, ekonomik karmaşıklık düzeyini artırıcı dinamikler—girişimcilik, inovasyon ve beşerî sermaye birikimi gibi—daha hızlı gelişmektedir. Bu doğrultuda, çalışmada kurumsal kalite göstergelerinin ekonomik karmaşıklık düzeyi üzerindeki etkisi, panel veri analiz yöntemlerinden Ortak İlişkili Tahminciler (Common Correlated Effects) aracılığıyla incelenmektedir. 2000–2021 dönemine ait verilerle yapılan analiz sonuçlarına göre, ekonomik özgürlükler, hukuk sistemi ve mülkiyet hakları, uluslararası ticaret özgürlüğü ve regülasyon endekslerinde meydana gelen artışların ekonomik karmaşıklık düzeyini pozitif yönde etkilediği tespit edilmiştir.

🔖

Cite This Article

Kılınç, E. C., Kılınç, N. Ş. (2025). The effect of institutional quality on economic complexity: Findings from OECD countries. Afyon Kocatepe Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, Cilt: 27 Sayı: 2, 406–420. https://doi.org/10.33707/akuiibfd.1709215

📄 Full Text PDF Viewer

📄

PDF görüntüleyici hazırlanıyor...

References (45)

  1. Acquah, E., Carbonari, L., Farcomeni, A., ve Trovato, G. (2023). Institutions and economic development: new measurements and evidence. Empirical Economics, 65(4), 1693-1728.
  2. Allahgholi, M. ve Momeni, F. (2025). Influential Factors of the Economic Complexity Index Based on the Social Orders Approach: A Case Study of Iran’s Economy. Iranian Journal of Economic Research, 29(101), 6-42.
  3. Aslam, A., Ishaq, M., Ghouse, G., ve Khan, B. (2023). Economic complexity, institutions, and property rights. European Management Studies, 21(3), 102-118.
  4. Atalay, A. Ç., ve Akan, Y. (2023). OECD Ülkelerinin Yeşil Ekonomi Verilerinin Çevresel Kuznets Eğrisi Hipotezine Göre Test Edilmesi. Trends in Business and Economics, 37(1), 57-67.
  5. Avcı, G. M. (2023). Malzeme Kuznets Eğrisi Hipotezi Geçerli mi? CIVETS Ülkelerinden Ampirik Kanıtlar. Selçuk Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, (52), 336-351.
  6. Avom, D., ve Ndoya, Hermann. (2024). Does country stability spur economic complexity? Evidence from panel data, Applied Economics Letters, 31:4, 323-329.
  7. Barkat, K., & Alsamara, M. (2019). The impact of foreign agricultural aid and total foreign aid on agricultural output in African countries: new evidence from panel data analysis. South African Journal of Economics, 87(3), 354-375.
  8. Blomquist, J., & Westerlund, J. (2013). Testing slope homogeneity in large panels with serial correlation. Economics Letters, 121(3), 374-378.
  9. Christou, C., Gupta, R., & Jawadi, F. (2021). Does inequality help in forecasting equity premium in a panel of G7 countries?. The North American Journal of Economics and Finance, 57, 101456.
  10. Chu, K. L. (2023). Determinants of economic complexity revisited: Insightful understanding from panel quantile regression. Journal of Economic and Banking Studies, 5, 30-44.
  11. Ditzen, J. (2018). Estimating dynamic common-correlated effects in Stata. The Stata Journal, 18 (3), 585-617.
  12. Duwal, N., ve Suwal, S. (2024). Institutional Quality and Economic Growth. Uygulamalı Ekonomi ve Sosyal Bilimler Dergisi, 6(1), 13-31.
  13. Dzhumashev, R., ve Hailemariam, A. (2021). Foreign aid and the quality of economic institutions. European Journal of Political Economy, 68, 102001.
  14. D’Ingiullo, D., Odoardi, I., Quaglione, D., ve Di Berardino, C. (2024). Exploring the nexus between exports’ economic complexity and institutional quality: insights from Italian provinces. Regional Studies, Regional Science, 11(1), 667-695.
  15. Erkan, B., ve Ceylan, F. (2021). Determinants of economic complexity in transitional economies. Journal Transition Studies Review, 28(2), 57-80.
  16. Fraser Institute (2024), Economic Freedom, 15 Şubat 2025 tarihinde https://www.fraserinstitute.org/economic-freedom/dataset?geozone=world&page=dataset&min-year=2&max-year=0&filter=0 adresinden edinilmiştir.
  17. Gulcemal, T. (2021). Financial globalization, institutions and economic growth impact on financial sector development in fragile countries using GMM estimator. Journal of Business Economics and Finance, 10(1), 36-46.
  18. Güneri, B., ve Yalta, A. Y. (2021). Does economic complexity reduce output volatility in developing countries?. Bulletin of Economic Research, 73(3), 411-431.
  19. Gwartney, J., Lawson, R., ve Murphy, R. (2024). Economic Freedom of the World: 2024 Annual Report. Fraser Institute.
  20. Harvard University (2024), Atlas of Economic Complexity, 15 Şubat 2025 tarihinde https://atlas.cid.harvard.edu/rankings adresinden edinilmiştir.
  21. Harvard University, (2025), Growth Projections and Complexity Rankings", 10 Mayıs 2025 tarihinde https://doi.org/10.7910/DVN/XTAQMC adresinden edinilmiştir.
  22. Hidalgo, C. A., ve Hausmann, R. (2009). The building blocks of economic complexity. Proceedings of the national academy of sciences, 106(26), 10570-10575.
  23. Hoang, D. P., ve Chu, L. K. (2023), Progression to Higher Economic Complexity: The Role of Institutions. Journal of the Knowledge Economy, 14: 4339–4366.
  24. Holly, S., ve Raissi, M. (2009). The macroeconomic effects of European financial development: A heterogenous panel analysis (No. D. 1.4). FINESS Working Paper.
  25. Jalil, A., ve Rauf, A. (2021). Revisiting the link between trade openness and economic growth using panel methods. The Journal of International Trade & Economic Development, 30(8), 1168-1187.
  26. Kim, S. H., ve Moon, S. (2022). Can demographic structures help predict equity premiums?: Evidence from a panel with cross-section dependence. Applied Economics Letters, 29(7), 635-639.
  27. Lanzafame, M. (2014). Temperature, rainfall and economic growth in Africa. Empirical Economics, 46, 1-18.
  28. Lee, K. K., ve Vu, T. V. (2020). Economic complexity, human capital and income inequality: a cross-country analysis. The Japanese Economic Review, 71(4), 695-718.
  29. Liu, B., Olayinka, O. A., Sofuoğlu, E., Abbas, S., ve Sinha, A. (2023). Should Asia Pacific economic cooperation countries put all their eggs in one energy basket? Examining the linkage between energy diversification and sustainable development. Energy Policy, 179, 113619.
  30. Mohamed Sghaier, I. (2022). The role of institutional quality in finance-growth nexus: evidence from North African Countries. Journal of the Knowledge Economy, 13(4), 3472-3491.
  31. Naghavi, N., ve Lau, W. Y. (2016). Financial liberalization and stock market efficiency: Causality analysis of emerging markets. Global Economic Review, 45(4), 359-379.
  32. Neal, T., (2015). Estimating Heterogeneous Coefficients in Panel Data Models with Endogenous Regressors and Common Factors.
  33. Nguyen, C. P., Schinckus, C., ve Su, T. D. (2023). Determinants of economic complexity: A global evidence of economic integration, institutions, and internet usage. Journal of the Knowledge Economy, 14(4), 4195-4215.
  34. Olaniyi, C. O., ve Odhiambo, N. M. (2023). Does institutional quality matter in the financial Development-Economic complexity Nexus? Empirical insights from Africa. Research in Globalization, 7, 100173.
  35. Pesaran, M. H. and R. Smith, (1995). Estimating Long-Run Relationships from Dynamic Heterogeneous Panels. Journal of Econometrics, 68, 79 113.
  36. Pesaran M. H. (2006). Estimation and inference in large heterogene ous panels with a multifactor error structure. Econometrica 74(4): 967–1012.
  37. Pesaran, M.H., (2007). A Simple Panel Unit Root Test in the Presence of Cross Section Dependence. Journal of Applied Econometrics, 22, 265-312.
  38. Rivera, B., Leon, M., Cornejo, G., ve Florez, H. (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, 11(8), 204.
  39. Shahabadi, A., Chayani, T., ve Sadeghi Motamedd, Z. (2021). Interaction of Innovation to Economic Freedom Index on Economic Complexity in Selected Science Producer Countries. The Journal of Economic Studies and Policies, 8(1), 31-55.
  40. Sharma, A., Sharma, V., ve Tokas, S. (2022). Institutional quality and health outcomes: Evidence from the EU countries. Economics and Business Letters, 11(2), 70-78.
  41. Şanlı, D., Gülbay Yiğiteli, N., ve Ergün Tatar, H. (2024). Do Economic Complexity Drivers Differ by Income Level? Insights From a Global Perspective. SAGE Open, 14(2), 21582440241239412.
  42. Vu, T. V. (2019). Does institutional quality foster economic complexity? University of Otago Economics Discussion Papers No. 1909
  43. Vu, T. V. (2022). Does institutional quality foster economic complexity? The fundamental drivers of productive capabilities. Empirical Economics, 63(3), 1571-1604.
  44. Yalta, A. Y., ve Yalta, T. (2021). Determinants of economic complexity in MENA Countries. JOEEP: Journal of Emerging Economies and Policy, 6(1), 5-16.
  45. Zhang, L., Khan, Z., Abbas, S., ve Ahamed, H. (2023). The roles of renewable energy, globalization, population expansion and deliberative democracy on Sustainable Development in South Asia. Environmental Science and Pollution Research, 30(38), 88775-88788.