From innovation to structural transformation: Dynamic evidence across the global economy (2009–2023)

This paper examines the dynamic links between innovation effort, innovation outcomes, economic complexity, and export upgrading across 70 economies from 2009 to 2023. Using System-GMM estimations and principal component analysis, it assesses how R&D investment and patenting activity contribute to productive sophistication and high-technology export specialization. The findings indicate a cumulative and path-dependent process: R&D expenditure positively affects patenting with time lags; patenting enhances economic complexity; and greater productive sophistication supports high-technology exports. However, interaction models reveal significant asymmetries across development levels, with peripheral economies displaying weaker innovation–complexity–export linkages. These results underscore persistent learning dynamics, structural heterogeneity, and path dependence in structural transformation. Policy implications emphasize sustained innovation investment, stable long-term funding, and mission-oriented industrial strategies, especially for developing economies facing capability gaps, structural vulnerabilities, and premature deindustrialization risks. Overall, the study provides new empirical evidence on how innovation capabilities shape structural upgrading and long-run development trajectories.