Role of Governance, Resource Rents, and Economic Complexity in Economic Growth: A BRICS Analysis

Abstract

This study addresses the critical challenge of understanding how natural resource utilization and economic complexity influence economic growth in BRICS nations—Brazil, Russia, India, China, and South Africa. The research aims to identify pathways through which these economies can leverage their resource endowments and industrial sophistication to sustain long-term growth, particularly amidst global economic shifts. To achieve this, the study employs a Generalized Method of Moments (GMM) approach, supported by descriptive analysis, to analyze panel data for BRICS countries from 1996 to 2022. This methodology ensures robust insights by accounting for endogeneity and dynamic relationships between key variables. The results demonstrate that natural resource rents positively contribute to economic growth, mainly supported by strong governance, regulatory frameworks, and effective corruption control. Furthermore, the Economic Complexity Index (ECI) is identified as a vital growth driver, with higher complexity fostering diversification, innovation, and competitiveness. The interaction of resource rents and economic complexity amplifies growth significantly, highlighting the importance of integrated policy strategies. The primary contribution of this research lies in providing empirical evidence that counters the “resource curse” hypothesis, demonstrating that BRICS nations can effectively utilize their natural resources in tandem with economic complexity to drive sustainable growth. Additionally, the study emphasizes the role of trade openness, foreign direct investment, and capital formation while underscoring the necessity of robust institutional frameworks. These findings offer actionable insights for policymakers and contribute to a broader understanding of growth dynamics in resource-rich emerging economies.