RESEARCH ARTICLE

Pedro Penalva Saia,Ivette Luna,Paulo Ricardo Silva Oliveira &José Ricardo Fucidji | Forum for Social Economics

The relationship between the Economic Complexity Index (ECI) and income inequality, measured by the Gini index, remains debated, with studies reporting both positive and negative correlations. In Latin America, inequality declined notably in the early 2000s, largely due to economic growth, educational gains, and social policy expansion. This paper examines whether, and to what extent, ECI helps explain this trend, controlling for educational, social, and macroeconomic factors. Using panel data for 16 Latin American countries from 2001 to 2017, we estimate fixed-effects and dynamic panel models with system- and difference-GMM estimators. Results suggest a dynamic relationship between ECI and inequality. While the contemporaneous effect of ECI on the Gini index is often positive, its lagged effect tends to be negative, suggesting temporal variation in the association. The findings highlight the mediating roles of education, growth, and redistributive policies in shaping how changes in economic complexity affect inequality in the region.

Full article: https://doi.org/10.1080/07360932.2025.2570297