Exploring the Interaction of Population, Globalization, and Institutional Factors for Achieving Economic Complexity in D8 Countries

Population plays a direct role in the production and demand of goods and services. Moreover, through indirect channels, the skilled and educated population, represented as the human capital as well as the process of research and development, innovation, and foreign direct investment, it can generate some complex and diverse products and, thus, would lead to creating the economic complexity of countries. Ultimately, all of these mechanisms can be employed under the appropriate institutional environment. Thus, the goal of this study is to explore the interaction of population, globalization, and institutional factors in achieving economic complexity. For this purpose, the population is divided into two categories: a population that is ready to work and produce, active population (between 15 and 64 years), and others (less than 14 years and over 65). The results of estimating the panel model by fully modified OLS (FMOLS) method during 1995–2019 show that the inactive population has a positive effect on the economic complexity in D8 countries. This means that this category of population is considered as a remarkable market for complex products. Furthermore, the interaction of active population, globalization, and institutional variables on the economic complexity of the studied countries is positive. This paper suggests that if the potential capacities of globalization and targeted guidance of the productive population are used, in the shadow of improving the institutional quality, we can see the positive effect of the productive population on the economic complexity of countries.