What drives successful economic diversification in resource-rich countries?

Resource type
Journal Article
Authors/contributors
Title
What drives successful economic diversification in resource-rich countries?
Abstract
The “resource curse” is often understood to imply poor growth in the non-resource sectors of the economy, but research into the diversification performance of resource-rich countries is limited. This paper surveys recent evidence and identifies empirical patterns in the economic diversification of resource-rich countries. Diversification is measured using the growth of per capita non-resource (manufacturing and services) sectors in domestic and export markets, which has a cleaner interpretation than competing measures. This measure is used to evaluate the long-term diversification of countries that started off as resource-dependent, and to rank countries according to their performance. We then identify policy-relevant correlates of diversification at the national level, including the acquisition of human capital, public and intellectual capital, and firm dynamism. More resource-dependent countries appear to perform worse on measures of human capital and intellectual capital, but more resource-abundant countries perform better on public capital and human capital accumulation. We examine the mechanisms behind diversification performance through in-depth case studies of Oman, Laos, and Indonesia, and conclude by identifying policy lessons and future research directions.
Publication
The World Bank Research Observer
Volume
36
Issue
2
Pages
164-196
Date
2021-08-01
Journal Abbr
The World Bank Research Observer
ISSN
0257-3032
Library Catalogue
Silverchair
Extra
37 citations (Crossref) [2024-04-29]
Citation
Lashitew, A. A., Ross, M. L., & Werker, E. (2021). What drives successful economic diversification in resource-rich countries? The World Bank Research Observer, 36(2), 164–196. https://doi.org/10.1093/wbro/lkaa001