Effects of Economic Complexity as A Development Index on Economic Performance: A Sub-Saharan Africa and BRICS Comparative Analysis

Abstract

The study provides a comparative analysis of the effects of economic complexity on the economic performance of selected Sub-Saharan Africa (SSA) and the BRICS group. The wellness of a nation depends on how inclusive the development progression of an economy is towards its people as seen through economic complexity. Economic performance is measured by gross domestic product per capita. Panel autoregressive distributive lag methodology is employed in the data spanning from 1994 to 2018 to estimate the long and short-run estimates. Results showed a positive relationship between economic complexity and economic performance for both SSA and BRICS at 5% and 10% significance respectively in the long run. In the short run, ECI was an insignificant predictor for both SSA and BRICS. In the long run, it can be recommended that countries should invest in their people, mostly youth, to improve human capabilities that can enhance their economic complexity. This is in the case of the SSA region with an average negative ECI. As shown in the BRICS countries more improved ECI might encourage GDP per capita. The SSA countries may form part of economic integrations with developed countries that offer mutual beneficiation that fast-tracks the development, following in the footsteps of South Africa in the BRICS formation.

Keywords

• gdp per capita
• economic complexity
• sub-sahara africa
• brics
• panel autoregressive distributive lag