Dynamics of the interplay between economic complexity, governance and economic growth in the BRICS countries: a panel GMM approach

Abstract

This study tried to understand how economic complexity can unravel economic growth, resisting resource curse phenomena within the dynamics of governance factors in the BRICS countries. We used the panel GMM model for the period 1996 to 2022. We employed Arellano and Bover’s (1995) GMM method for dynamic panel data estimation. Further, we used the Wald test to identify endogeneity. The results show that natural resources are a robust driver of economic growth, while the economic complexity index is pivotal in enhancing economic growth in the BRICS countries. Governance quality encompassing political stability, regulatory quality, rule of law, and control of corruption, exerts substantial influence on economic growth. While resource rents can determine economic growth, robust outcomes depend on economic complexity and the quality of governance of an economy in the context of the BRICS economies.

Keywords

• natural resources
• economic complexity
• economic growth
• governance
• resource curse