Why do natural resource-rich economies resist improving the economic complexity?

Abstract

The evidence suggests that resource-rich countries tend to exhibit a relatively constant level of economic complexity, with limited progress. To investigate the underlying causes of this phenomenon, we employed a Pooled Mean Group (PMG) model using data from the top 20 resource-rich economies spanning the period 2000–2020. Our analysis aimed to identify the factors contributing to this behavior. The findings of our study support the natural resource curse hypothesis, indicating that effective control of corruption can lead to an improvement in long-term economic complexity. Furthermore, the heterogenous short-run dynamics observed in the PMG model indicate that economic and institutional variables have influenced the short-term economic complexity behavior of certain countries, such as Gabon, Iran, Algeria, and Kazakhstan.