Complexity and Growth

Over the past decades, research effort in high income countries has substantially increased. Meanwhile, the growth rates of per capita output have been rather stable. The first goal of this paper is to investigate the reasons for such trends. The second goal of the paper is to show that the occurrence of different phases in the economic growth dynamics traces back to the interplay between complexity and specialization in production. To do this we use data from a sample of OECD countries and estimate a Hidden Markov Model, through which we identify four distinct growth regimes.