Document Type : Research Paper
Authors
Department of Economics, Faculty of Management and Economics, Lorestan University, Khorramabad, Iran
Abstract
The discussion of sustainable development and moving toward the 17 Sustainable Development Goals (SDGs) is of great importance for emerging countries. In this study, the impact of economic complexity, along with financial, economic, and political risks, on sustainable development in 47 emerging countries over the period 2000-2021 is examined. To estimate the model, considering economic complexity as the threshold variable, the Panel Smooth Transition Regression (PSTR) approach is employed.
The results indicate a significant negative relationship between economic complexity and sustainable development in the first regime (before the threshold) and a significant positive relationship in the second regime (after the threshold). Additionally, the study finds a significant positive relationship between financial risk and sustainable development in the first regime (before the economic complexity threshold), while in the second regime, this relationship turns negative and significant. Moreover, the effect of economic and political risk on sustainable development is negative in the first regime but becomes positive and significant in the second regime.
The effect of natural resource rents on sustainable development in the first regime (before the threshold) is -0.12, while after the economic complexity threshold (18%), this negative effect decreases to -0.10. Furthermore, the impact of urbanization on sustainable development, which is 0.51 before the threshold (in the first regime), decreases to 0.38 after the economic complexity threshold, suggesting that increasing economic complexity can reduce the effect of urbanization on sustainable development.
Lastly, the effect of government public expenditure on sustainable development is positive and significant in both regimes. Specifically, before the economic complexity threshold (18%), the impact of government spending on sustainable development is 0.10, and this increases to 0.21 in countries with economic complexity above the 18% threshold.
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