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<p>Today's economies operate under more complexity and more uncertainty than the ones standard growth models were built to describe. What drives GDP growth in that environment is the question this paper takes up. The setting is a panel of 117 countries from 1996 to 2021, and the four candidate drivers are economic complexity, human capital, governance quality, and uncertainty. A two-way fixed-effects specification is estimated on the full sample. The same specification is then re-estimated on two sub-samples—28 developed and 89 developing economies—so that the point estimates can be compared directly. Three findings stand out. The first is on uncertainty, which depresses growth in every specification considered. The estimated drag is larger in developed economies and this is consistent with the higher level of financial integration in advanced economies translating uncertainty more quickly into investment and hiring decisions. The second finding concerns governance. In the developed-economy sample, it is the political-stability and voice-and-accountability content of governance that drives the estimated growth effect, not the broader bundle of administrative quality and rule of law that the standard single-composite measure picks up. Standard practice would have missed this distinction. The third finding concerns economic complexity. Its estimated effect on growth is negative in the developing-economy sub-sample, reflecting the short-run structural-adjustment costs of moving up the complexity ladder for countries that are still some distance from the frontier. A long list of robustness checks—including a specification that adds lagged log GDP to control for conditional convergence—leaves the main qualitative findings intact and reveals that the human-capital coefficient grows substantially in magnitude and becomes statistically significant once convergence is included on the right-hand side. The implications for policy are context-specific. Stability and the safeguarding of political institutions are the binding priorities in advanced economies. Basic governance reform and staged complexity upgrading are the priorities in developing ones.</p>

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Economic growth in uncertain times: insights from complexity, human capital and governance in developed and developing economies

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  • 出版模式：

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  • 发表日期：

    2026年7月13日

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  • Pantelis C. Kostis,
  • Panagiotis E. Petrakis

摘要

Today's economies operate under more complexity and more uncertainty than the ones standard growth models were built to describe. What drives GDP growth in that environment is the question this paper takes up. The setting is a panel of 117 countries from 1996 to 2021, and the four candidate drivers are economic complexity, human capital, governance quality, and uncertainty. A two-way fixed-effects specification is estimated on the full sample. The same specification is then re-estimated on two sub-samples—28 developed and 89 developing economies—so that the point estimates can be compared directly. Three findings stand out. The first is on uncertainty, which depresses growth in every specification considered. The estimated drag is larger in developed economies and this is consistent with the higher level of financial integration in advanced economies translating uncertainty more quickly into investment and hiring decisions. The second finding concerns governance. In the developed-economy sample, it is the political-stability and voice-and-accountability content of governance that drives the estimated growth effect, not the broader bundle of administrative quality and rule of law that the standard single-composite measure picks up. Standard practice would have missed this distinction. The third finding concerns economic complexity. Its estimated effect on growth is negative in the developing-economy sub-sample, reflecting the short-run structural-adjustment costs of moving up the complexity ladder for countries that are still some distance from the frontier. A long list of robustness checks—including a specification that adds lagged log GDP to control for conditional convergence—leaves the main qualitative findings intact and reveals that the human-capital coefficient grows substantially in magnitude and becomes statistically significant once convergence is included on the right-hand side. The implications for policy are context-specific. Stability and the safeguarding of political institutions are the binding priorities in advanced economies. Basic governance reform and staged complexity upgrading are the priorities in developing ones.