Economic diversification in the mena region-G20 Insights

Oxford Energy Forum, 2019

2012

The political and social upheavals that followed the Arab Spring of 2011 continue to dominate economic activity and near term prospects in the Middle East and North Africa (MENA). Although political transitions bring promises of greater political and economic freedom, in MENA the process remains far from complete and has been accompanied by increased political and macroeconomic instability in 2013. In Egypt, rising social and political tensions weighed heavily on confidence. In Syria, a marked escalation of the civil war exacted a heavy economic and human toll, with spillovers to neighboring Lebanon, Jordan, and Iraq. Oil production in developing MENA oil exporters has fallen because of security setbacks, infrastructure problems, strikes, and in the case of Iran, economic sanctions. Meanwhile, the GCC oil exporters continue to make up the loss in oil production, while providing financial support to the region's transition economies.

2018

This series explores the nature of Middle Eastern political regimes and their approaches to economic development. In light of the region's distinctive political, social and economic structures and the dramatic changes that took place in the wake of the Arab spring, this series puts forward a critical body of high-quality, research-based scholarship that reflects current political and economic transitions across the Middle East. It offers original research and new insights on the causes and consequences of the Arab uprisings; economic reforms and liberalization; political institutions and governance; regional and sub-regional integration arrangements; foreign trade and investment; political economy of energy, water and food security; finance and Islamic finance; and the politics of welfare, labor market and human development. Other themes of interest include the role of the private sector in economic development, economic diversification, entrepreneurship and innovation; state-business relationships; and the capacity of regimes and public institutions to lead the development process.

2012

2011

Introduction: MENA felt the impact of the financial and economic crisis to a much lesser extent than developed economies and emerging markets outside Asia, however, the economic recovery in MENA has also lacked vigor. Before the recent uprisings, MENA was expected to return to pre-crisis growth rates of 4.8 percent by 2011-12, but growth rates in this range are not high enough to address the key challenges facing the region, including high unemployment rates-especially for young people and low labor-force participation rates, notably for women. The region also has one of the world's lowest formal employment rates as well as the highest population and labor force growth rates among middle-income economies. To address these challenges MENA's economy should be growing at rates close to those observed in East Asia and other highperforming emerging economies. It has not done so.

One of the major issues before the oil-rich Arab Gulf States in recent decades has been the diversification of their economies from the oil to non-oil sectors. Their heavy dependence (from 70 to 90%) on the oil revenues has prompted these countries to formulate the policies so that other sources of income from the non-oil sector can be enhanced. But the question is how for these Gulf States have been successful in implementing these policies? Moreover, what are the major drawbacks in the diversification their economies in the present time? In this paper, an attempt has been made to understand the rationale behind the diversification of Arab Gulf economies dominated any single rent revenues. This has been discussed in the framework of their overall macro-economic development, taking into consideration the various factors of productions, so that a desired balanced growth can be maintained. The main focus of the paper is on the current initiatives taken these States towards the building of a non-oil economy. While highlighting the Arab Gulf State‘s economic diversification drive, the paper particularly point out the varying degrees of seriousness and success because as this paper concludes, this economic diversification project could be conceived without taking into account the impact of fluctuation in oil prices in the global market as well as on the overall economic and political stability in the region

Saudi Journal of Economics and Finance, 2020

Economic diversification entails the process of reducing dependence on single source of income or output generation. The basic idea behind economic diversification, therefore, is to develop the kind of diverse sectors that make significant value addition in an economy rather than relying on a single sector. It is in this backdrop that the present study is articulated to shed light on the pattern of economic diversification among the countries of the Middle Eastern region. The present paper employed two measures of diversification such as share of employment and value added of a particular sector in Gross Value Added over the period 1970-2016. The study has found that the region as a whole is witnessing economic diversification in terms of both the criterions at a moderate speed. Dynamic tradeable sectors should be developed in order to enhance the pace of economic diversification to strengthen macro-economy.

RePEc: Research Papers in Economics, 2013

Employing an empirical and comparative approach, this research paper analyses the past record and future trends of economic diversification efforts in the six Gulf Cooperation Council (GCC) countries. Applying the methodology of content analysis, possible future diversification trends are studied from current development plans and national visions published by the GCC governments. The past record of diversification has yielded only meagre results. Current development plans point unanimously to diversification as the means to secure the stability and the sustainability of income levels in the future. Even though the states continue to lead the economies, diversification entails a reinvigoration of the private sector and as such necessitates the implementation of broader reforms. The paper, however, questions the likelihood of diversification plans being translated into action. There are a number of structural barriers to diversification, which relate to the growth scenarios for the world economy, the duplication of economic activities among the GCC states, and, not least, the sizable barriers to interregional trade. Furthermore, the policy response to preempt the Arab Spring uprising indicates that these regimes easily give up their well-argued and planned policies when under pressure and fall back on established ways of doing business, namely through patronage and the predominant role of the public sector. Hence, the prospect of diversifying economies through politically difficult economic reforms has suffered a significant setback. This conclusion, however, does not rule out a piecemeal and ad hoc implementation of the diversification strategies in the future.