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Journals / Sosyal Siyaset Konferansları Dergisi / 2026 / Sayı: 90

The Impact of Export Complexity on Income Inequality: A Dynamic Panel Data Analysis for Developing Countries

Aytuğ Zekeriya Bolcan(ISTANBUL UNIVERSITY)0000-0002-5162-4337
Pages
32–58
Publication Date
2026-07-21
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AI Summary & Key Takeaways

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

The results suggest that the relationship between export complexity and inequality is context-dependent (conditional on the inequality concept employed and the extent of fiscal redistribution) and that export upgrading alone is insufficient for reducing inequality without targeted education investments, institutional quality improvements, and labour market policies.

📌 3 Key Takeaways

🎯
Objective & Hypothesis:This study empirically investigates the effect of export complexity on income inequality across a panel of 96 developing countries over the 1990-2023 period.
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Key Findings & Data:Employing the Economic Complexity Index (ECI) developed by the Harvard Growth Lab alongside the disposable income Gini coefficient from the Standardized World Income Inequality Database (SWIID v9.9), we apply dynamic panel data methods to address endogeneity, persistence, and unobserved heterogeneity.
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Conclusion & Impact:The results suggest that the relationship between export complexity and inequality is context-dependent (conditional on the inequality concept employed and the extent of fiscal redistribution) and that export upgrading alone is insufficient for reducing inequality without targeted education investments, institutional quality improvements, and labour market policies.
🔬Design:Araştırma Makalesi
📍Scope:2023 Verileri
⚙️Variables:Economic complexity · income inequality · dynamic panel data

Abstract

This study empirically investigates the effect of export complexity on income inequality across a panel of 96 developing countries over the 1990-2023 period. Employing the Economic Complexity Index (ECI) developed by the Harvard Growth Lab alongside the disposable income Gini coefficient from the Standardized World Income Inequality Database (SWIID v9.9), we apply dynamic panel data methods to address endogeneity, persistence, and unobserved heterogeneity. The two-step Arellano-Bover/Blundell-Bond System GMM estimator reveals no statistically significant relationship between economic complexity and disposable-income inequality in the full sample: neither the linear ECI term (β = 0.692, p = 0.127) nor the quadratic term (β = 0.278, p = 0.127) achieves conventional significance levels. Dumitrescu–Hurlin panel Granger causality tests reject the null hypothesis of non-causality in both directions between ECI and the Gini coefficient (p < 0.001 in each direction), providing strong evidence of bidirectional predictive causality. Subgroup analyses by World Bank income classification reveal no statistically significant ECI effect in either the lower-middle-income or upper-middle-income groups; the low-income group (17 countries) cannot be validly estimated by System GMM because its time dimension exceeds its cross-sectional dimension (T ≥ N). A Türkiye-specific case study examines how the structural transformation of Türkiye’s export basket has coevolved with income distribution across three subperiods. However, robustness checks show that this null result is specific to the disposable-income measure: when inequality is measured by the market (pre-redistribution) Gini, and in a trimmed sample, both the linear and quadratic ECI terms become positive and statistically significant (market-income Gini: 𝛽𝐸𝐶𝐼=1.246, 𝛽𝐸𝐶𝐼2=0.425, both p < 0.05), indicating that export complexity is associated with higher pre-redistribution inequality (a within-country pattern consistent with Lee and Vu (2020) and Chu and Hoang (2020)). The results suggest that the relationship between export complexity and inequality is context-dependent (conditional on the inequality concept employed and the extent of fiscal redistribution) and that export upgrading alone is insufficient for reducing inequality without targeted education investments, institutional quality improvements, and labour market policies.

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Cite This Article

Bolcan, A. Z. (2026). The Impact of Export Complexity on Income Inequality: A Dynamic Panel Data Analysis for Developing Countries. Sosyal Siyaset Konferansları Dergisi, Sayı: 90, 32–58. https://doi.org/10.26650/jspc.2026.90.1913275

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