Promoting and financing industrial diversification in resource-dependent developing countries

Altowaim, Sultan (2018) Promoting and financing industrial diversification in resource-dependent developing countries. PhD thesis, University of Glasgow.

Abstract

This thesis studies the promotion and financing of industrial diversification in natural resource-dependent countries. It tries to contribute to the existing literature by addressing three research questions in three main chapters. Chapter 2 attempts to answer the following question: Does financial development induce the diversification and complexity of exports in natural resource-dependent countries? Financial development and deregulation are standard recommendations in order to achieve greater industrial and economic development in these countries. However, using standard panel data econometrics, this chapter shows that financial development has no positive impact on export diversification or complexity. It argues that a general financial development policy recommendation is not expected to be a key for industrial and export diversification in these countries. This result provides an essential motivation for the following chapters.
Chapter 3 looks at the financing of industrial diversification in two specific countries, namely Chile and Malaysia, which were both natural resource-dependent, but managed to successfully diversify their respective economies. The two countries have followed different strategies. In Chile, diversification has been towards niche natural resource-based industries, while in Malaysia the strategy has been to defy comparative advantages, resulting in specialization in sophisticated and high value added products. This chapter examines the role of the state and the financial system in financing the industrial diversification. The main finding is that in both countries the state has always played a key role in directing finance to strategic sectors and in contributing to the emergence of new industrial activities. Diversification in Chile and Malaysia has not occurred through free market operations and liberalized financial systems settings.
Chapter 4 concentrates on promoting industrial diversification in oil dependent countries using Saudi Arabia as the case study. It starts by reviewing various strategies of economic diversification in the context of resource-dependent countries. In particular, it reviews the literature on resource-based industrialization (e.g. Perez, 2015), the literature on the Growth Identification and Facilitation Framework (i.e. Lin 2011) and the literature on the product space theory (i.e. Hidalgo and Hausmann 2009). This chapter, then, uses these frameworks to suggest possible diversification strategies in Saudi Arabia and to assess the government’s recently promoted diversification plan (Vision 2030). Furthermore, the potential role of the Saudi financial system is fully examined.

• Item Type: Thesis (PhD)
• Qualification Level: Doctoral
• Keywords: Economic development, Industrial policy, financing economic development, economic diversification.
• Subjects: H Social Sciences > HB Economic Theory; H Social Sciences > HJ Public Finance
• Colleges/Schools: College of Social Sciences > Adam Smith Business School > Economics
• Supervisor's Name: Paloni, Dr. Alberto and Cerretano, Dr. Valerio
• Date of Award: 2018
• Depositing User: Mr Sultan Altowaim
• Unique ID: glathesis:2018-38942
• Copyright: Copyright of this thesis is held by the author.
• Date Deposited: 29 Nov 2018 09:40
• Last Modified: 13 Dec 2019 08:26
• Thesis DOI: 10.5525/gla.thesis.38942
• URI: https://theses.gla.ac.uk/id/eprint/38942