Economic growth in nations with an abundance of natural resources tends to be lower and more volatile.
Diversifying activity from an over-dependence on natural resources — such as oil, minerals or commodities — allows countries to harness resource rents as an engine of growth, rather than a barrier to economic development, avoiding the “resource curse”.
For fossil fuel-dependent countries, ambitious global decarbonisation commitments (UN Cop climate summits, net zero emissions) and energy transition plans to address climate change have added to the urgency of economic diversification, given that oil and gas accounted for 31.89 per cent and 21.34 per cent of global greenhouse gas emissions in 2021.
With economic diversification a policy imperative in the Middle East, nations can turn to the Global Economic Diversification Index (EDI) to track their performance over time, undertake peer comparisons and measure the gap with higher-ranked nations.
The EDI identifies and examines 25 economic indicators, analysing and combining three main dimensions of diversification — output, trade and government revenue — across 105 nations for the period 2000-2021.
The top-ranked nations have maintained their standing over time, with the US, China and Germany ranking highest in 2021.
What are the major lessons and outcomes? First, there is a positive correlation between EDI and gross domestic product per capita (but being a high-income country does not imply a high economic diversification score) and, secondly, the higher the share of resource rents in GDP, the lower the EDI score.
Third, countries do not need to take a traditional industrialisation route: services and financial services led Singapore and Switzerland to rank highly alongside industrialised nations such as Germany and the UK.
Fourth, innovation and adoption of new technology is an essential ingredient for greater diversification, with many top performers also in World Intellectual Property Organisation's [WIPO's] Global Innovation Index, and, finally, size need not be an impediment to economic diversification (“small” Ireland, the Netherlands and Singapore rank high).
GCC economic diversification
While the non-oil sector has grown in the GCC, the oil sector continues to dominate, accounting for more than 40 per cent of GDP in most countries.
In the past decade, there has been a concerted effort to diversify revenue and support fiscal sustainability, with the introduction of VAT and excises taxes (with the UAE introducing corporate tax this year and Oman studying a proposal for income tax).
However, consumption taxes remain a small share of total revenue in comparison to oil and gas in the nations that have introduced VAT, while Qatar and Kuwait have yet to introduce consumption tax.
At present, trade is also heavily reliant on exports of oil and gas and their derivatives such as petrochemicals.
The coronavirus was a game-changer. To shift from over-dependence on commodities, the GCC (and others) have diversified into services-based sectors such as tourism, trade, logistics and transport. But these were affected in the initial Covid-19 year, leading to a reassessment of diversification strategies.
The pandemic has galvanised policymakers into action to support FDI flows, labour mobility liberalisation, privatisation and structural reforms.
Economic diversification 2.0
On the output side, there is greater opportunity in moving towards knowledge-based and innovation-led activities, creating space for private sector activity (especially in the tradables sector), and developing industrial policies and clusters, with local procurement strategies fostering job-creation at small and medium enterprises.
Incentivising policies supporting the diffusion of new technology (such as electric transport systems or robotics), alongside a push for investment into new sectors, including digital economy, clean energy and climate technology, and increasingly general purpose tech such as artificial intelligence, will also support diversification.
The continuing privatisation of state-owned assets and enterprises allows for the opportunity to “de-risk” fossil fuel assets, with the added advantage of raising revenue, developing and diversifying financial markets, and attracting both domestic and foreign investment and technology.
The pandemic underscored the need for trade diversification — both in terms of products and trade partners — and of supply chains.
The GCC will also benefit from the enactment of new “deep trade agreements”, including the broad category of services, such as digital services (e-services, e-commerce and digital finance), beyond the limited scope of trade in goods.
With the shift in global economic geography towards Asia, a China-GCC free-trade agreement (under negotiation since 2004) is a strategic priority, given that China is the main trade and economic partner of the region and would integrate the GCC into Asian supply chains.
Trade reforms, when complemented by structural reform, including in the labour market, will lead to greater skill diversity in the workforce, enabling mobility and lower transition costs, job creation and raising productivity growth.
The pandemic has galvanised policymakers into action to support FDI flows, labour mobility liberalisation, privatisation and structural reforms
Additionally, policy reforms will encourage private sector activity by lowering the costs of conducting business, thereby encouraging private and foreign investment, and promoting competitiveness and capital market development (including the development of a yield curve, a domestic corporate bond market), with a focus on climate finance and funding the green economy as part of energy transition policies.
Economic diversification leads to more balanced and stable economies, and is key to inclusive economic development and sustainable job creation.
The EDI is a tool that enables evidence-based policymaking and informs the design of strategy and policy measures, allows for the evaluation of policies’ impact and effectiveness, and enables monitoring of policy outcomes, as well as helps to identify problem areas. It enables policy research aimed at identifying strategies and policies that foster and those that hinder diversification.
Resting on current diversification achievements is insufficient. Commodity dependent nations need to sustain economic/structural reforms and innovate to catch-up faster with the frontrunners.
Nasser Saidi is the president of Nasser Saidi and Associates. He was formerly Lebanon's economy minister and a vice-governor of the Central Bank of Lebanon
Aathira Prasad is director of macroeconomics at Nasser Saidi and Associates
Europa League group stage draw
Group A: Villarreal, Maccabi Tel Aviv, Astana, Slavia Prague.
Group B: Dynamo Kiev, Young Boys, Partizan Belgrade, Skenderbeu.
Group C: Sporting Braga, Ludogorets, Hoffenheim, Istanbul Basaksehir.
Group D: AC Milan, Austria Vienna , Rijeka, AEK Athens.
Group E: Lyon, Everton, Atalanta, Apollon Limassol.
Group F: FC Copenhagen, Lokomotiv Moscow, Sheriff Tiraspol, FC Zlin.
Group G: Vitoria Plzen, Steaua Bucarest, Hapoel Beer-Sheva, FC Lugano.
Group H: Arsenal, BATE Borisov, Cologne, Red Star Belgrade.
Group I: Salzburg, Marseille, Vitoria Guimaraes, Konyaspor.
Group J: Athletic Bilbao, Hertha Berlin, Zorya Luhansk, Ostersund.
Group K: Lazio, Nice, Zulte Waregem, Vitesse Arnhem.
Group L: Zenit St Petersburg, Real Sociedad, Rosenborg, Vardar
BMW%20M4%20Competition
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MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
SPEC%20SHEET%3A%20NOTHING%20PHONE%20(2a)
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The results of the first round are as follows:
Qais Saied (Independent): 18.4 per cent
Nabil Karoui (Qalb Tounes): 15.58 per cent
Abdelfattah Mourou (Ennahdha party): 12.88 per cent
Abdelkarim Zbidi (two-time defence minister backed by Nidaa Tounes party): 10.7 per cent
Youssef Chahed (former prime minister, leader of Long Live Tunisia): 7.3 per cent
The%20specs
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Tom Fletcher on 'soft power'
Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
UAE currency: the story behind the money in your pockets
The%20specs
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Traits of Chinese zodiac animals
Tiger:independent, successful, volatile
Rat:witty, creative, charming
Ox:diligent, perseverent, conservative
Rabbit:gracious, considerate, sensitive
Dragon:prosperous, brave, rash
Snake:calm, thoughtful, stubborn
Horse:faithful, energetic, carefree
Sheep:easy-going, peacemaker, curious
Monkey:family-orientated, clever, playful
Rooster:honest, confident, pompous
Dog:loyal, kind, perfectionist
Boar:loving, tolerant, indulgent
Oppenheimer
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COMPANY%20PROFILE
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How to join and use Abu Dhabi’s public libraries
• There are six libraries in Abu Dhabi emirate run by the Department of Culture and Tourism, including one in Al Ain and Al Dhafra.
• Libraries are free to visit and visitors can consult books, use online resources and study there. Most are open from 8am to 8pm on weekdays, closed on Fridays and have variable hours on Saturdays, except for Qasr Al Watan which is open from 10am to 8pm every day.
• In order to borrow books, visitors must join the service by providing a passport photograph, Emirates ID and a refundable deposit of Dh400. Members can borrow five books for three weeks, all of which are renewable up to two times online.
• If users do not wish to pay the fee, they can still use the library’s electronic resources for free by simply registering on the website. Once registered, a username and password is provided, allowing remote access.
• For more information visit the library network's website.
At a glance - Zayed Sustainability Prize 2020
Launched: 2008
Categories: Health, energy, water, food, global high schools
Prize: Dh2.2 million (Dh360,000 for global high schools category)
Winners’ announcement: Monday, January 13
Impact in numbers
335 million people positively impacted by projects
430,000 jobs created
10 million people given access to clean and affordable drinking water
50 million homes powered by renewable energy
6.5 billion litres of water saved
26 million school children given solar lighting
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
THE SPECS
Engine: 3.5-litre V6
Transmission: six-speed manual
Power: 325bhp
Torque: 370Nm
Speed: 0-100km/h 3.9 seconds
Price: Dh230,000
On sale: now
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
About Proto21
Date started: May 2018
Founder: Pir Arkam
Based: Dubai
Sector: Additive manufacturing (aka, 3D printing)
Staff: 18
Funding: Invested, supported and partnered by Joseph Group
Points to remember
- Debate the issue, don't attack the person
- Build the relationship and dialogue by seeking to find common ground
- Express passion for the issue but be aware of when you're losing control or when there's anger. If there is, pause and take some time out.
- Listen actively without interrupting
- Avoid assumptions, seek understanding, ask questions
Abu Dhabi Grand Slam Jiu-Jitsu World Tour Calendar 2018/19
July 29: OTA Gymnasium in Tokyo, Japan
Sep 22-23: LA Convention Centre in Los Angeles, US
Nov 16-18: Carioca Arena Centre in Rio de Janeiro, Brazil
Feb 7-9: Mubadala Arena in Abu Dhabi, UAE
Mar 9-10: Copper Box Arena in London, UK
If%20you%20go
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Total eligible population
About 57.5 million people
51.1 million received a jab
6.4 million have not
Where are the unvaccinated?
England 11%
Scotland 9%
Wales 10%
Northern Ireland 14%
Company%20Profile
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Last-16 Europa League fixtures
Wednesday (Kick-offs UAE)
FC Copenhagen (0) v Istanbul Basaksehir (1) 8.55pm
Shakhtar Donetsk (2) v Wolfsburg (1) 8.55pm
Inter Milan v Getafe (one leg only) 11pm
Manchester United (5) v LASK (0) 11pm
Thursday
Bayer Leverkusen (3) v Rangers (1) 8.55pm
Sevilla v Roma (one leg only) 8.55pm
FC Basel (3) v Eintracht Frankfurt (0) 11pm
Wolves (1) Olympiakos (1) 11pm
UAE currency: the story behind the money in your pockets
More from Rashmee Roshan Lall
Company profile
Company name: Dharma
Date started: 2018
Founders: Charaf El Mansouri, Nisma Benani, Leah Howe
Based: Abu Dhabi
Sector: TravelTech
Funding stage: Pre-series A
Investors: Convivialite Ventures, BY Partners, Shorooq Partners, L& Ventures, Flat6Labs
'Doctor Strange in the Multiverse Of Madness'
Director: Sam Raimi
Cast: Benedict Cumberbatch, Elizabeth Olsen, Chiwetel Ejiofor, Benedict Wong, Xochitl Gomez, Michael Stuhlbarg and Rachel McAdams
Rating: 3/5
ESSENTIALS
The flights
Emirates flies from Dubai to Phnom Penh via Yangon from Dh2,700 return including taxes. Cambodia Bayon Airlines and Cambodia Angkor Air offer return flights from Phnom Penh to Siem Reap from Dh250 return including taxes. The flight takes about 45 minutes.
The hotels
Rooms at the Raffles Le Royal in Phnom Penh cost from $225 (Dh826) per night including taxes. Rooms at the Grand Hotel d'Angkor cost from $261 (Dh960) per night including taxes.
The tours
A cyclo architecture tour of Phnom Penh costs from $20 (Dh75) per person for about three hours, with Khmer Architecture Tours. Tailor-made tours of all of Cambodia, or sites like Angkor alone, can be arranged by About Asia Travel. Emirates Holidays also offers packages.