Effect of economic complexity on services export diversification: do foreign direct investment inflows matter?

Purpose The purpose of this study is to explore the effect economic complexity on services export diversification. This has been built two arguments. first one draws from Eichengreen and Gupta (2013b) states that countries complex products would have a high penetration in international goods market establish network could be exploited expand their range items. Second, by inducing higher inflows foreign direct investment (FDI), greater contribute fostering Design/methodology/approach empirical analysis uses panel data set 109 (both developed developing countries) over period 1985–2014, particular, non-overlapping sub-periods five-year average data. Building two-step system Generalized Method Moments, provided support for above-mentioned theoretical hypotheses. Findings findings indicate associated with level diversification, magnitude positive high-income than countries. Furthermore, share FDI (in percentage gross domestic product) matters Specially, exerts as net product increases. Research limitations/implications From policy perspective, complements previous works effects (e.g. growth, income inequality, poverty, etc.), showing also diversification countries' Enhancing should at heart policymakers' agenda, both national levels, given its strong macroeconomic aggregates, including latter being an important engine growth (Anand et al. , 2012; Gnangnon, 2021a; Mishra 2011; Stojkoski 2016). Practical implications opens avenue future research whether influences complexity. One comparative advantage (using Balassa's revealed index) Future examine how affects different categories sectors, traditional modern services. Originality/value To best author’s knowledge, address topic literature.