Economic Regional Growth and Complexity: The Role of Microenterprises and MEI

Abstract

This study estimates the relationship between complexity and regional economic growth in Brazil from 2008 to 2019. The main contribution of this study lies in the inclusion of small businesses without employees and individual micro-entrepreneurs in the construction of complexity indicators. For this purpose, in addition to RAIS data, CNPJ data provided by the Brazilian Federal Revenue Service were used. Three complexity indexes were calculated using different databases:ICE^A (companies, including MEI), ICE^B( companies, excluding MEI), and ICE^V (only employment relationships). Growth regressions, with appropriate controls, showed that these new complexity indicators were associated with the economic growth of micro regions in the period. The results reinforce the importance of careful attention to the methodology of calculating complexity measures. Despite the limitations of the study and the characteristics of the period, the hypothesis that local complexity influences economic growth was not falsified.