What Do We Know About Economic Diversification in Oil-Producing Countries?

44 Pages Posted: 6 Oct 2017

See all articles by Michael L. Ross

Michael L. Ross

University of California, Los Angeles (UCLA) - Department of Political Science

Date Written: January 24, 2017

Abstract

Countries dependent on oil and mineral exports are often advised to diversify their economies, yet surprisingly little is known about how this can be done. This paper reviews the recent literature on diversification in resource-dependent states and suggests it has been constrained by missing and inconsistent data, and a reliance on diversification measures that are relatively uninformative for resource-rich states. It then uses an improved measure of export concentration from Papageorgiou and Spatafora to document three empirical patterns over the last half-century: the divergence between oil-producing states and non-oil states; the reconcentration of exports in most oil and mineral producing states since 1998, caused by the boom in commodity prices; and the heterogeneity of the oil producers, marked by greater diversification in Latin America and Southeast Asia, mixed performances in the Middle East, and greater concentration in Africa and the former Soviet Union. While change in the former Soviet Union was spurred by large new discoveries, the diversification failure of all oil-producing states in both North and sub-Saharan Africa is striking, and stands in contrast to the region’s non-oil producers. The paper concludes with a research agenda for deepening our understanding of this issue.

Keywords: natural resources, resource curse, oil curse, economic diversification

JEL Classification: Q32, Q37

Suggested Citation

Ross, Michael L., What Do We Know About Economic Diversification in Oil-Producing Countries? (January 24, 2017). Available at SSRN: https://ssrn.com/abstract=3048585 or http://dx.doi.org/10.2139/ssrn.3048585

Michael L. Ross (Contact Author)

University of California, Los Angeles (UCLA) - Department of Political Science ( email )

405 Hilgard Ave.
Los Angeles, CA 90095-1472
United States

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