“Economic diversification in resource rich countries: History, state of knowledge and research agenda”

with Sambit Bhattacharyya and Maurizio Intartaglia, Resources Policy, June 2017, Volume 52, pp. 154-164.

Is economic diversification desirable for a resource rich country? Our knowledge on this issue is at best partial. This paper revisits the literature on diversification in resource rich states. It maps the history of diversification, identifies gaps in the literature and documents some trends in the data. In particular, it exposes limitations in the data and catalogues trends in non-oil exports and non-oil private sector employment. It concludes with an agenda for research.

Working papers:

“The Impact of Resource Abundance on Economic Diversification in the GCC”: Gulf Research Center, University of Cambridge, December 2015

Can resource-rich countries diversify their economies? This paper examines the impact of natural resource rents on diversification in exports, in employment and in value added, covering up to 136 countries from 1962-2012. I find a significant negative relationship between resource rents and diversification. The results are heterogeneous across different country groups and resources; the countries of the Arab Gulf are not an exception as they follow the high resource dependent group. Moreover, I find that the higher resource dependency the less likely the country would go into diversification through its development, compared to less resource dependent countries where diversification takes a U-shaped path noted by Imbs and Wacziarg (2003). Instead, concentration grows rapidly.

“Oil Discovery, Political institutions and Economic Diversification”, with Sambit Bhattacharyya, University of Oxford CSAE working papers No WPS/2016-19, August 2016

Classical theory predicts that petroleum rich countries would specialise in petroleum products. Yet diversification is touted as a desirable policy objective for petroleum rich nations because it reduces exposure to volatility. Given such theoretical ambiguity, it is important to understand the empirical relationship between petroleum and diversification. In this paper, we test the effect of giant oil discoveries on diversification using a panel dataset covering up to 136 countries and the period 1962 to 2012. After controlling for country and year fixed effects, we find evidence of non-oil export concentration 8 years after a discovery. However, we do not observe any effect on the structure of employment in the non-resource and manufacturing sectors.

“Oil Booms, Dutch Disease and Manufacturing Growth” (work in progress)

This paper estimates the causal effect of two commodity shocks suggested by the Dutch Disease hypothesis on the tradable manufacturing sector: giant oil discoveries as a resource discovery shock, and oil price boom and bust as a commodity price shock. Using panel analysis, I compare between countries that have discovered giant oilfields to countries that have not during 1962-2008. Recent literature on the Dutch Disease indicates a positive impact of oil booms on manufacturing. Our results suggest that the total manufacturing could benefit from oil shocks, through increased local demand for manufactured goods resulting from the revenue windfall that was met by increased demand on imports and local production. However, the main suggestion of these results is that tradable industries in manufacturing are harmed by the oil shocks in terms of growth in value added and wages.