The effects of financial development on economic sophistication: evidence from panel data

ABSTRACT

This article empirically examines the effect of financial development on economic sophistication, measured by Economic Complexity Index. Using a panel dataset of 94 countries from 1968 to 2015 and system generalized method of moments estimation, we find that both banking sector and stock market development have positive effects on economic sophistication.

KEYWORDS:

• Financial development
• economic complexity
• productivity knowledge
• panel data

JEL CLASSIFICATION:

• E44
• G10
• O10

Disclosure statement

No potential conflict of interest was reported by the author.