The pursuit of stable and robust economic growth has consistently been a cornerstone of economic policy objectives. In this pursuit, economic complexity has emerged as paramount driver, significantly fostering innovation, promoting economic diversification, and yielding substantial long-term productivity gains. This study undertakes a rigorous examination of the impact of economic complexity on entrepreneurship density within the specific context of Iran's oil-dependent economy, an environment notably characterized by extensive governmental intervention in revenue allocation processes.

Employing a sophisticated Time‑Varying Parameter Vector Autoregression with Stochastic Volatility (TVP‑VAR‑SV) model, this research meticulously analyzes the intricate dynamic interdependencies among the core variables across different time horizons. The empirical findings compellingly indicate that economic complexity, while initially inducing a contractionary short-term effect on entrepreneurship density, subsequently catalyzes a sustained expansionary phase in the longer term. Moreover, the analysis quantifies a positive contribution of economic complexity to GDP growth, estimating it at a 0.25% increase.

The nuanced impact of government size on entrepreneurship density is observed to manifest initially as a slight negative influence. However, this effect progressively attenuates over time, eventually transitioning into a positive and significant impact on the economy. Consequently, this study strongly recommends that policymakers strategically prioritize substantial investments in technological advancement, critical infrastructure development, and comprehensive educational reforms. Such strategic priorities are essential to fully harness the profound long-term benefits of economic complexity for fostering entrepreneurship, while simultaneously endeavoring to mitigate the potentially disruptive short-term costs associated with structural adjustments.