Natural Resource Abundance, Growth and Diversification in MENA : The Effects of Natural Resources and the Role of Policies

Natural Resource Abundance, Growth and Diversification in MENA : The Effects of Natural Resources and the Role of Policies

The Middle East and North Africa (MENA) region is one of the richest in the world in terms of natural resources. It holds more than 60 percent of the world's proven oil reserves, mostly located in the Gulf region, and nearly half of global gas...

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Bibliographic Details
Main Authors:	Diop, Ndiame, Marotta, Daniela, de Melo, Jaime
Format:	Brief
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	CLOSED ECONOMIES COMPETITIVENESS DIVERSIFICATION ECONOMIC ACTIVITIES ECONOMIC EFFICIENCY ECONOMIC LITERATURE ECONOMIC OPPORTUNITIES ECONOMIC PERFORMANCE ECONOMIC POLICY EXCHANGE RATE EXCHANGE RATES EXPORT DIVERSIFICATION EXPORTS FISCAL POLICIES FISCAL POLICY FLEXIBLE EXCHANGE RATES GDP GROSS DOMESTIC PRODUCT GROWTH PROSPECTS GROWTH RATES HUMAN CAPITAL INCOME INCOME GROUP INCOMES INCOMES INCREASE INDUSTRIAL POLICY INFRASTRUCTURE INVESTMENTS INPUT PRICES INSTITUTIONAL ENVIRONMENT INTERMEDIATE INPUTS JOB CREATION LABOR FORCE LIBERALIZATION LONG RUN MACROECONOMIC POLICIES MACROECONOMIC STABILITY MARKET FAILURES MARKET REGULATIONS MARKET SHARES NATURAL RESOURCE NATURAL RESOURCES NEGATIVE EFFECT NEGATIVE IMPACT OIL OIL EXPORTERS OVERVALUATION PER CAPITA INCOMES POLICY IMPLICATIONS POLICY MAKERS POLICY REFORMS POOR COUNTRIES PRODUCTIVITY PROVEN OIL RESERVES PUBLIC EXPENDITURE PUBLIC GOODS PUBLIC INVESTMENT PUBLIC SECTOR REAL EXCHANGE RATE REAL EXCHANGE RATES REGIONAL INTEGRATION REGIONAL TRADE REGULATORY RESTRICTIONS RICH COUNTRIES TRADE DIVERSION TRADE LIBERALIZATION TRADE POLICIES TRANSPARENCY UNDERVALUATION VOLATILITY WAGES WEALTH WEALTH DISTRIBUTION WELFARE GAINS WORLD ECONOMY
Online Access:	http://documents.worldbank.org/curated/en/2012/10/16988573/natural-resource-abundance-growth-diversification-mena-effects-natural-resources-role-policies http://hdl.handle.net/10986/20576

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Summary:	The Middle East and North Africa (MENA) region is one of the richest in the world in terms of natural resources. It holds more than 60 percent of the world's proven oil reserves, mostly located in the Gulf region, and nearly half of global gas reserves. Not surprisingly, oil represents close to 85 percent of the merchandise exports of the region, making it highly susceptible to fluctuations in international prices. A long strand of economic literature suggests that such dependence may hurt a country's growth prospects and job creation by reducing the scope for economic diversification. A forthcoming WB publication investigates how MENA can overcome this challenge and encourage greater economic diversification. The study examines the pattern of structural transformation in MENA and explores the role of natural resources and macroeconomic policies in driving the current (limited) diversification outcomes. The authors explore analytical questions, such as: (i) the impact of the real exchange rate on manufacturing and tradable services competitiveness in MENA; (ii) the role of fiscal policy in supporting diversification; (iii) how 'weak links' (input sectors with low productivity) play a critical role in explaining the concentration of economic activities, in addition to the classical Dutch disease effect; and (iv) the impact of macroeconomic factors on the drive for regional integration. The main findings are summarized in this quick note. The study highlights that the negative effect of rents is compounded by the negative impact of policy and regulatory restrictions on entry, and of business conduct on the development of services sectors.