HUMAN CAPITAL AND TECHNOLOGY IN THE GROWTH OF ECONOMIC STRUCTURE

Abstract

Recognizing a relationship between economic structure and growth is important but not enough for screening policies. For policy purposes, the second natural step is to understand how structural change proceeds, indicating which variables explain the economic structure. We shed light on this debate analyzing the relationship between economic structure, human capital, and technology investment at the national level. We use a new measure of the economic structure -the Economic Complexity Index- in a fixed-effects panel with 97 countries from 1996 to 2015. Results indicated that a more complex structure is related to higher levels of human capital, investment in technology, and trade openness. Regarding human capital, the democratization of education plays a role, but its quality is the centerpiece for structural change.