Oil Resources and Diversification in a Small Open Economy: The Case of Oman

  • Said Al Saqri
Part of the The Political Economy of the Middle East book series (PEME)


The overall objective of this exercise was to examine Oman efforts to diversify its economy utilizing oil resources by estimating the total factor productivity (TFP) of the oil sector and the non-oil sector. The overall results suggest that GDP growth is driven mainly by capital accumulation and labour employment rather than innovation and efficient utilization of resources. The contributing factors to GDP growth in the past 45 years of the oil era have been mainly labour and capital. In addition, TFP analysis shows that oil sector contribution to GDP growth was positive; however, non-oil contribution was negative. Such results give evidence that the productive structure will be adversely affected in the case of depressed oil income and in the eventual exhaustion of oil resources. To sustain growth technology, knowledge and skills must be increased through better education and training. In addition, policymakers must look into structural reforms, including policy and institutional reforms, that will liberalize trade, encourage foreign investment, and make the business environment more transparent and business friendly.


Oil resources Diversification Small open economy Oman 


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Copyright information

© Gulf Research Centre Cambridge 2018

Authors and Affiliations

  • Said Al Saqri
    • 1
  1. 1.Oman Economic AssociationMuscatOman

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