Internal Dynamic Markets as National Resilience Capital: A Multi-Panel Analysis of Growth and Shock Mitigation

This study introduces and validates the concept of internal dynamic markets as the primary type of national resilience capital. A new index, obtained through principal component analysis, is used for the investigation of a panel of 30 nations over the period of 1995 to 2024. While exports remain a significant driver of growth, our analysis suggests that strong internal dynamic markets may function more as stabilizing mechanisms than as direct growth accelerators. Although the statistical evidence for this stabilizing effect in standard linear models is modest, the directional consistency of the findings in linear models shows that economies with higher IDM scores exhibited directionally smaller output contractions during global crises, which aligns conceptually with the notion of IDM as a form of national resilience capital. The study also states that good governance can be a significant contributing factor for economies to gain more from global markets. The results suggest that internal markets have changed their position from a passive backdrop to an active shock-absorber, which leads to direct implications of the policies for sustainable and resilient growth targeting sustainable development goals 8 and 9.