Manufacturing and Economic Complexity: A Multisectorial Empirical Analysis

This paper aims to analyze empirically how manufacturing, disaggregated into subsectors by R&D intensity, influences the level of economic complexity (ECI). For this, two methods are used: i) the parametric, and ii) the non-parametric: a) Data Envelopment Analysis (DEA) and b) Malmquist Decomposition. The econometric results suggests that the allocation of workers in the manufacture (of high R&D level) has a positive impact on the ECI level of all the countries in the sample analyzed, whereas in the sectors of lower R&D there is a greater impact in emerging countries, but lower effects (or negative) on advanced countries. In general, the non-parametric results present the relationship between efficiency in manufacturing subsectors and economic complexity as an inverted U shape. Special attention is given to Brazil, which manufacturing catching up was underperformed in explaining total factor productivity in the analyzed period.