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The Product Space Conditions Aid Effectiveness: Empirical Evidence from the Knowhow Nexus of Technical Cooperation and Economic Complexity

Wiklander, Simon LU (2025) EKHS22 20251
Department of Economic History
Abstract
The product space conditions the process through which economies become complex and develop. Does it also condition aid effectiveness? This thesis examines the relationship between technical cooperation (TC) and economic complexity and brings a novel perspective by documenting that the complexity opportunity index (COI) significantly enhances the association. Employing fixed effects panel regression analysis to a sample of 85 developing countries between 1995-2023 and exploiting COI to capture their different positions in the product space, I argue that TC is more effective in countries that are positioned nearby an abundance of complex opportunities. Furthermore, conceiving TC as a potential contributor to the accumulation of knowhow in... (More)
The product space conditions the process through which economies become complex and develop. Does it also condition aid effectiveness? This thesis examines the relationship between technical cooperation (TC) and economic complexity and brings a novel perspective by documenting that the complexity opportunity index (COI) significantly enhances the association. Employing fixed effects panel regression analysis to a sample of 85 developing countries between 1995-2023 and exploiting COI to capture their different positions in the product space, I argue that TC is more effective in countries that are positioned nearby an abundance of complex opportunities. Furthermore, conceiving TC as a potential contributor to the accumulation of knowhow in recipient countries, the thesis finds that TC significantly improves economic complexity. The main policy implication is that donors should consider the product space of recipients to ensure effective technical cooperation. (Less)
Please use this url to cite or link to this publication:
author
Wiklander, Simon LU
supervisor
organization
course
EKHS22 20251
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Economic Complexity, Product Space, Technical Cooperation, Complexity Opportunity, Aid Effectiveness, Knowhow, Quiescence Trap
language
English
id
9196219
date added to LUP
2025-06-16 11:43:02
date last changed
2025-06-16 11:43:02
@misc{9196219,
  abstract     = {{The product space conditions the process through which economies become complex and develop. Does it also condition aid effectiveness? This thesis examines the relationship between technical cooperation (TC) and economic complexity and brings a novel perspective by documenting that the complexity opportunity index (COI) significantly enhances the association. Employing fixed effects panel regression analysis to a sample of 85 developing countries between 1995-2023 and exploiting COI to capture their different positions in the product space, I argue that TC is more effective in countries that are positioned nearby an abundance of complex opportunities. Furthermore, conceiving TC as a potential contributor to the accumulation of knowhow in recipient countries, the thesis finds that TC significantly improves economic complexity. The main policy implication is that donors should consider the product space of recipients to ensure effective technical cooperation.}},
  author       = {{Wiklander, Simon}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The Product Space Conditions Aid Effectiveness: Empirical Evidence from the Knowhow Nexus of Technical Cooperation and Economic Complexity}},
  year         = {{2025}},
}