ERF 26th Annual Conference
Economic Diversification in the Middle East and North Africa: A Developmental Approach to Managing Non-renewable Resource Revenues
No.
ERF26_271
Publisher
ERF
Date
June, 2020
Topic
H. Public Economics
P. Economic Systems
This paper investigates the political economy of managing resource revenues and economic diversification in Middle East and North Africa. The management of revenues from exhaustible natural resources involves a number of interrelated challenges, such as inter-generational equity, commodity price volatility, diversification away from resource dependence, environmental sustainability and shared prosperity. Nevertheless, how and where should resource revenues be invested in remains the source of a contentious debate. By shedding light on some of the contextual determinants (such as the level of resource abundance per capita, the urgency to diversify the economy based on current dependence on extractive exports, infrastructure deficits and public investment stock to date) that influence the trade-offs underlying policy decisions to manage resource revenues, this study moves away for a one size fits all solutions and contributes to outline a resource-based development model that is more adapted to the context of the different petroleumdependent economies of the MENA region. This paper concludes that countries such as Algeria and Iran should pursue a resource revenue management model that differs from the one currently followed by countries such as the UAE, Kuwait and Qatar, which is more based on financial diversification rather than the transformation of the domestic productive structure.
Authors
Amir Lebdioui
Development Economist, London School of Economics (LSE)