Economic complexity and financial development: A multilayered analysis of the European Union

The economic complexity framework by César Hidalgo and Ricardo Hausmann has inspired a substantial body of literature throughout recent years. Following previous research, which explored the various drivers of economic complexity, this article contributes by exploring the interplay with financial development. For the base sample of the European Union, a positive effect of financial development on economic complexity is found, identifying the financial institutions channel as the strongest driver of the Economic Complexity Index. Critical reflection leads to the assumption that a holistic replication of the study on a global scale could retrieve non-linear characteristics of said relationship.