How does export concentration affect economic complexity? Applying the seemingly unrelated regression approach for selected Central and Eastern European countries
Elif Tuğçe Bozduman
Keywords:
Export Concentration, Economic Complexity, Seemingly Unrelated Regression Estimator, Central and Eastern European Countries
Abstract:
Countries’ export concentration can reduce foreign trade competitiveness because product and geographical concentration indicate that a country is dependent on other countries. Such circumstances can undermine countries’ competitiveness and prevent them from having a significant global influence. Countries’ economic complexity is determined using many macroeconomic indicators. If a country’s complexity is higher, its competitiveness is higher. In particular, exporting products with high added value and innovative technologies is a significant approach for competing in the world market. Therefore, this study examines how the concentration of high-tech product exports affects the complexity of Central and Eastern European (CEE) countries with high export competitiveness potential. This study contributes to the literature in two ways. First, we calculate the concentration of high-tech product exports in CEE countries using the Herfindahl–Hirschman Index (HHI) to determine the degree of export concentration, revealing that Slovakia and Slovenia have the highest concentrations. Second, we use the HHI value as an independent variable in our econometric model to examine its effect on economic complexity using the seemingly unrelated regression estimator. The findings reveal that HHI affects economic complexity in the majority of CEE countries. A one-unit increase in concentration decreases economic complexity in other countries, with the exception of Slovakia and Slovenia. Increased export concentration will also negatively affect countries’ global competitiveness as it decreases economic complexity.
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 How does export concentration affect economic complexity? Applying the seemingly unrelated regression approach for selected Central and Eastern European countries [PDF file] [Filesize: 474.66 KB]
 10.7441/joc.2025.01.09
Bozduman, E. T. (2025). How does export concentration affect economic complexity? Applying the seemingly unrelated regression approach for selected Central and Eastern European countries. Journal of Competitiveness, 17(1), 185-200. https://doi.org/10.7441/joc.2025.01.09
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