Economic complexity, exports and natural resources in the Gulf Cooperation Council

The concept of economic complexity, introduced by Hidalgo and Hausmann {2009), suggests that countries' knowledge and capabilities can be inferred through their ability to export a wide range of products relative to the rest of the world. The associated Economic Complexity Index {ECI) has since grown in popularity as a way of predicting countries' economic growth, income inequality, and human development, among other outcomes. However, the applicability of this concept across different contexts has remained unquestioned. We argue that the unique characteristics of natural resource dependent countries are largely disregarded. Using the ECI for 179 countries from 1995 to 2019, we focus on the case of the Gulf Cooperation Council countries {GCCs), generally considered as high- income economies heavily reliant on oil and natural gas exports. While we find that the link between the ECI and subsequent economic growth observed across countries holds for the GCC and other oil-dependent countries, our analysis exposes important ways in which the ECI is affected by the high dependence on oil and its price volatility. Contrary to existing literature, we found no association between economic complexity and economic growth within countries over time. Our analysis calls for more caution when relying on economic complexity measures for policy-making and highlights the need for additional and more granular analysis of different contexts, particularly those heavily reliant on natural resources.