THE REFLECTIONS OF DEVELOPMENTS IN FINANCIAL TECHNOLOGIES ON ECONOMIC COMPLEXITY

Abstract

The Economic Complexity Index (ECI) is a measure of an economy’s productive knowledge capacity, measured through the export of sophisticated products. Economies with high levels of ECI are recognised to perform relatively well in many socioeconomic areas. Although it is a relatively new measure, the effects of ECI on socioeconomic variables and the determinants of ECI have been widely researched in the literature in recent years. On the other hand, the macroeconomic effects of Financial Technology (FinTech) developments, which have made financial services technology-intensive in the last decade, have also attracted considerable attention. This study, which aims to reveal the impact of FinTech developments on the ECI with the help of an index representing these developments, differs from the literature in this respect. Considering data availability in the analysis process, the Driscoll-Kraay robust estimator is used in the study, which examines the 7 economies with the highest ECI score for the period 2012-2021. The results obtained show that technological developments in the financial field negatively affect the ECI level in the sample group. Therefore, financial technological developments in this country group reduce the exports of sophisticated products. On the other hand, the human development index, R&D expenditures, and freedom of business, which are used as control variables, positively affect the ECI score.

Keywords

• Economic Complexity
• Financial Technology
• Panel Data Analysis

FİNANSAL TEKNOLOJİLERDEKİ GELİŞMELERİN EKONOMİK KOMPLEKSİTEYE YANSIMALARI

Öz

Ekonomik Kompleksite Endeksi (ECI) sofistike ürün ihracatı vasıtasıyla ölçülen ve ekonominin üretken bilgi kapasitesinin göstergesi olarak kabul edilen bir ölçüttür. Yüksek ECI seviyesine sahip ekonomilerin birçok sosyoekonomik alanda görece iyi performans gösterdiği kabul edilmektedir. Kısmen yeni bir ölçüt olmasına rağmen ECI’nin sosyoekonomik değişkenler üzerindeki etkileri ve ECI’yi belirleyen faktörlerin tespiti son yıllarda literatürde yaygın bir şekilde araştırılmaya başlanmıştır. Öte yandan, özellikle son on yıllık süreçte finansal hizmetleri teknoloji yoğun hale getiren Finansal Teknoloji (FinTek) gelişmelerinin makroekonomik etkileri de kayda değer bir ilgi çekmektedir. FinTek gelişmelerini temsil eden bir endeks yardımıyla söz konusu gelişmelerin ECI üzerindeki etkisini ortaya koymayı amaçlayan çalışma bu yönüyle literatürden ayrışmaktadır. Analiz sürecinde verilerin ulaşılabilirliği dikkate alınarak ECI skoru en yüksek 7 ekonominin 2012-2021 dönemi itibariyle incelendiği çalışmada Driscoll-Kraay dirençli tahmincisi kullanılmıştır. Elde edilen sonuçlar finansal alanda yaşanan teknolojik gelişimlerin örneklem grubunda ECI seviyesini olumsuz etkilediğini göstermektedir. Dolayısıyla bu ülke grubunda finansal teknolojik gelişmeler sofistike ürün ihracatını azaltmaktadır. Diğer yandan kontrol değişken olarak kullanılan insani gelişmişlik endeksi, AR&GE harcamaları ve girişim özgürlüğü ECI skorunu olumlu yönde etkilemektedir.

Anahtar Kelimeler

• Ekonomik Kompleksite
• Finansal Teknoloji
• Panel Veri Analizi

References

1. Albeaik, S., Kaltenberg, M., Alsaleh, M., & Hidalgo, C. A. (2017). Improving the economic complexity index. http://arxiv.org/abs/1707.05826 sayfasından erişilmiştir. Erişim Tarihi: 15.09.2024
2. Allen, H. J. (2024). Regulating Fintech: A harm focused approach. Computer Law & Security Review, 52, 105910. https://doi.org/10.1016/j.clsr.2023.105910
3. Antonietti, R., & Franco, C. (2021). From FDI to economic complexity: A panel Granger causality analysis. Structural Change and Economic Dynamics, 56, 225-239.
4. Arner, D. W., Barberis, J., & Buckley, R. P. (2015). The evolution of Fintech: A new post-crisis paradigm. University of Hong Kong Faculty of Law Research Paper, 47, 1271.
5. Arner, D. W., Barberis, J., & Buckley, R. P. (2017). FinTech and RegTech in a nutshell, and the future in a sandbox. https://www.cfainstitute.org/-/media/documents/article/rf-brief/rfbr-v3-n4-1.ashx sayfasından erişilmiştir. Erişim Tarihi: 25.06.2024
6. Aslam, A., Ghouse, G., & Khan,B.(2022). The driver role of financial development on the economic complexity: An empirical evidence from 33 BRI Participation Countries. Audit and Accounting Review, 2(1), 25–45.
7. Baloch, M. A., Khan, S. U. D., Ulucak, Z. Ş., & Ahmad, A. (2020). Analyzing the relationship between poverty, income inequality, and CO2 emission in Sub-Saharan African countries. Science of the Total Environment, 740, 139867.
8. Baltagi, B. H., & Wu, P. X. (1999). Unequally spaced panel data regressions with AR (1) disturbances. Econometric Theory, 15(6), 814-823.

9. Bhargava, A., Franzini, L., & Narendranathan, W. (1982). Serial correlation and the fixed effects model. The Review of Economic Studies, 49(4), 533-549.
10. Breusch, T. S., & Pagan, A. R. (1980). The Lagrange multiplier test and its applications to model specification in econometrics. The Review of Economic Studies, 47(1), 239-253.
11. Britannica (2024). Millennial demographic group. https://www.britannica.com/topic/millennial sayfasından erişilmiştir. Erişim Tarihi: 21.06.2024
12. Can, M., & Doğan, B. (2017). The effects of economic structural transformation on employment: An evaluation in the context of economic complexity and product space theory. In F. Yenilmez & E. Kılıç (Eds.), Handbook of research on unemployment and labor market sustainability in the era of globalization (pp. 1338-1368). IGI Global.
13. Can, M., & Doğan, B. (2018). Ekonomik kompleksite ve finansal gelişme ilişkisi: Türkiye örnekleminde ampirik bir analiz. Finans Politik ve Ekonomik Yorumlar, 638, 5-16.
14. Chávez, J. C., Mosqueda, M. T., & Gómez-Zaldívar, M. (2017). Economic complexity and regional growth performance: Evidence from the Mexican economy. Review of Regional Studies, 47(2).
15. Cheston, T., & León, L. R. (2023). Boosting future economic growth through diversification. https:// www.wipo.int/global_innovation_index/en/gii-insights-blog/2023/boosting-economic-growth. html sayfasından erişilmiştir. Erişim Tarihi: 20.06.2024
16. Chu, L. K. (2020). The effects of financial development on economic sophistication: Evidence from panel data. Applied Economics Letters, 27(15), 1260-1263.
17. Chu, K. L. (2023). Determinants of economic complexity revisited: Insightful understanding from panel quantile regression. Journal of Economic and Banking Studies, 5, 30-44.
18. Çınar, M. (2021). Panel veri ekonometrisi: Stata ve Eviews uygulamalı. Bursa: Ekin Yayınevi.
19. Datta, Aloke vd. (2018). PCA, Kernel PCA and dimensionality reduction in hyperspectral images. In Ganesh R. Naik (Ed.), Advances in Principal Component Analysis (pp. 19-46). Singapur: Springer Nature.
20. Dhiaf, M. M., Khakan, N., Atayah, O. F., Marashdeh, H., & El Khoury, R. (2024). The role of FinTech for manufacturing efficiency and financial performance: in the era of industry 4.0. Journal of Decision Systems, 33(2), 220–241. https://doi.org/10.1080/12460125.2022.2094527
21. Domini, G. (2022). Patterns of specialization and economic complexity through the lens of universal exhibitions, 1855-1900. Explorations in Economic History, 83, 101421.
22. Doru, Ö. (2022). Türkiye’de ekonomik karmaşıklık endeksi (ECI) ve doğrudan yabancı yatırım ilişkisi. Artuklu Kaime Uluslararası İktisadi ve İdari Araştırmalar Dergisi, 5(2), 235-251.
23. Driscoll C. H., & Kraay A. C., (1998). Consistent covariance matrix estimation with spatially dependent panel data. The Review of Economics and Statistics, 80, 549-560.
24. Efeoğlu, R. (2022). N11 ülkelerinde ekonomik kompleksite ve finansal gelişme. Celal Bayar Üniversitesi Sosyal Bilimler Dergisi, 20(01), 185-196.
25. Erkan, B., & Ceylan, F. (2021). Determinants of economic complexity in transitional economies. Journal Transition Studies Review, 28(2), 57-80.
26. Ertan Özgüzer, G., & Oğuş-Binatlı, A. (2016). Economic convergence in the EU: A complexity approach. Eastern European Economics, 54(2), 93-108.
27. Gujarati, D. N. & Porter, D. C. (2012). Temel ekonometri (Ü. Şenesen & G. G. Şenesen, Çev.). İstanbul: Literatür Yayınları.
28. Güriş, S., & Tuna, E. (2011). Çevresel Kuznets eğrisi’nin geçerliliğinin panel veri modelleriyle analizi. Trakya Üniversitesi Sosyal Bilimler Dergisi, 13(2), 173-189.
29. Hausman, J. A. (1978). Specification tests in econometrics. Econometrica, 46(6), 1251–1271. doi:10.2307/1913827.
30. Hausmann, R., & Hidalgo, C. A. (2011). The network structure of economic output. Journal of Economic Growth, 16, 309-342.
31. Hausmann, R., Hidalgo, C. A., Bustos, S., Coscia, M., & Simoes, A. (2013). The atlas of economic complexity: Mapping paths to prosperity. MIT Press, https://growthlab.hks.harvard.edu/publications/ atlas-economic-complexity-mapping-paths-prosperity sayfasından erişilmiştir. Erişim Tarihi: 12.07.2024
32. Hidalgo, C. A. (2021). Economic complexity theory and applications. Nature Reviews Physics, 3(2), 92- 113.
33. Hidalgo, C. A., & Hausmann, R. (2009). The building blocks of economic complexity. Proceedings of the National Academy of Sciences, 106(26), 10570-10575.
34. Hoang, D. P., & Chu, L. K. (2023). Progression to higher economic complexity: The role of institutions. Journal of the Knowledge Economy, 14(4), 4339-4366. https://doi.org/10.1007/s13132-022- 01059-x
35. Hoechle, D. (2007). Robust standard errors for panel regressions with cross-sectional dependence. The Stata Journal, 7(3), 281-312.
36. Hsioa, C. (2014). Analysis of panel data. New York: Cambridge University Press.
37. Kaiser, B. (2014, September). RHAUSMAN: Stata module to perform Robust Hausman Specification Test. Statistical Software Components, Boston College Department of Economics. https://ideas. repec.org/c/boc/bocode/s457909.html sayfasından erişilmiştir. Erişim Tarihi: 25.06.2024
38. Kanga, D., Oughton, C., Harris, L., & Murinde, V. (2022). The diffusion of fintech, financial inclusion and income per capita. The European Journal of Finance, 28(1), 108–136. https://doi.org/10.108 0/1351847X.2021.1945646
39. Karabıyık, C. (2021). Ekonomik kompleksite ve doğrudan yabancı sermaye yatırımları ilişkisi: BRICS-T ülkeleri üzerine bir panel veri analizi. Yaşar Üniversitesi E-Dergisi, 16(63), 1133-1149.
40. Kurt, Ü. (2018). Küreselleşme ve ekonomik kompleksite ilişkisi: Türkiye örneği, Hitit Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, 11(3). 2195-2202. https://doi.org/10.17218/hititsosbil.454395
41. Lukonga, I. (2018). Fintech, inclusive growth and cyber risks: A focus on the MENAP and CCA regions. IMF Working Paper, WP/18/201.
42. Ma, Hehe vd. (2012). A novel local neighborhood standardization strategy and its application in fault detection of multimode processes. Chemometrics and Intelligent Laboratory Systems, 118, 287-300.
43. Mumtaz, M. Z., & Smith, Z. A. (2020). Empirical examination of the role of fintech in monetary policy. Pacific Economic Review, 25(5), 620-640. https://doi.org/10.1111/1468-0106.12319
44. Ndoya, H., Ongo Nkoa, B. E., Kemeze, F. H., & Nchofoung, T. N. (2024). Financial development and economic complexity: The role of country stability. Economics of Transition and Institutional Change, 32(2), 415-447.
45. Nguyen, C. P., & Su, T. D. (2021). Economic integration and economic complexity: The role of basic resources in absorptive capability in 40 selected developing countries. Economic Analysis and Policy, 71, 609-625.
46. Nguyen, C. P., Schinckus, C., & Su, T. D. (2020). The drivers of economic complexity: International evidence from financial development and patents. International Economics, 164, 140-150. https:// doi.org/10.1016/j.inteco.2020.09.004
47. Njangang, H., Asongu, S., Tadadjeu, S., & Nounamo, Y. (2021). Is financial development shaping or shaking economic sophistication in African countries? European Xtramile Centre of African Studies WP/21/018.
48. Ortiz-Ospina, E., & Beltekian, D. (2018). How and why should we study ‘economic complexity’? https:// ourworldindata.org/how-and-why-econ-complexity sayfasından erişilmiştir. Erişim Tarihi: 20.06.2024
49. İpek, Ö., & İpek, E. (2022). Determinants of energy demand for residential space heating in Turkey. Renewable Energy, 194, 1026-1033, https://doi.org/10.1016/j.renene.2022.05.158
50. Pesaran, M. H. (2004). General diagnostic tests for cross section dependence in panels. Cambridge Working Papers in Economics, No. 0435, Cambridge.
51. Philippon, T. (2016). The fintech opportunity. National Bureau of Economic Research, No. w22476, https://www.nber.org/papers/w22476 sayfasından erişilmiştir. Erişim Tarihi: 20.06.2024
52. Poncet, S., & de Waldemar, F. S. (2013). Economic complexity and growth. Revue Economique, 64(3), 495-503.
53. Şanlı, D., & Gülbay Yiğiteli, N. (2023). Do economic complexity and macroeconomic stability asymmetrically affect carbon emissions in OECD? Evidence from nonlinear panel ARDL approach. Environment, Development and Sustainability, 1-24.
54. Tok, Y. W., & Heng, D. (2022). Fintech: Financial inclusion or exclusion? https://www.imf.org/en/Publications/ WP/Issues/2022/05/06/Fintech-Financial-Inclusion-or-Exclusion-517619 sayfasından erişilmiştir. Erişim Tarihi: 24.06.2024
55. Utkovski Z., Pradier M.F., Stojkoski V., Perez-Cruz F., & Kocarev L. (2018). Economic complexity unfolded: Interpretable model for the productive structure of economies. Plos One, 13(8). https:// doi.org/10.1371/journal.pone.0200822
56. Yalta, Y. A., & Yalta, T. (2021). Determinants of economic complexity in MENA countries. Journal of Emerging Economies and Policy, 6(1), 5-16.
57. Yamak, N., Gürel, F., & Koçak, S. (2016). Hırsızlık suçunun sosyo-ekonomik ve demografik belirleyicileri: Panel veri analizi. TISK Akademi, 11(21), 56-69.
58. Yerdelen Tatoğlu, F. (2020). Panel veri ekonometrisi Stata uygulamalı. İstanbul: Beta Basım Yayın Dağıtım.