Evaluating the effects of socioeconomic factors on economic complexity

An analysis of the relationship between the economic complexity index (ECI) and various socioeconomic variables is presented in this study. Complexity of the economy is an important indicator of a country's ability to produce and its knowledge base. ECI-high countries are generally more technologically advanced, with a more diverse and sophisticated production structure, higher levels of education, and better income distribution. We used canonical correlation analysis to analyze the relationship between ECI and socioeconomic variables. A variety of socio-economic variables were considered in the analysis based on 2021 data, including the GDP, foreign direct investments, political stability index, innovation index and average life expectancy. The importance of trade, technology, and research has been examined as indicators of economic complexity. Based on the results of the analysis, ECI and socio-economic variables have strong positive relationships. Among the three indices of economic complexity, the innovation index has the strongest positive correlation, followed by GDP and life expectancy. Economic complexity variables are positively correlated with foreign direct investments, even though the relationship is weaker.