In the GCC region, UAE and Saudi Arabia have made the most significant economic diversification progress, according to the second edition of the index, launched by the Mohammed Bin Rashid School of Government (MBRSG) with a panel of global experts from the IMF and the World Bank at the World Government Summit in Dubai.
Overall, the 2023 EDI rankings revealed that the top 10 most diversified economies have remained the same, a Wam news agency report said.
The United States, China, and Germany have held on to their top three positions. However, the gap between the US and China narrowed from a 21.6-point difference in 2019 to just a six-point difference in 2022. The results also show that the size of the economy is not an impediment to economic diversification as several of the top 10 countries are relatively small economies, including Singapore, Switzerland and Ireland, who were able to diversify their economic output base and trade.
The index, developed by the MBRSG in partnership with The World Government Summit, expands its coverage in 2023 to a total of 105 countries, up from 83 last year. It continues to cover all geographies, resource and non-resource-based economies over a period of 22 years.
The index quantifies countries' diversification journey globally, by specifically focusing on three aspects of diversification: Output diversification, trade diversification and government revenue diversification.
The EDI is the first comprehensive global assessment of economic diversification that allows for an international, cross-country, and regional comparison and ranking of countries. As a policy and decision-making tool, it is designed to allow countries to visualise their global ranking on each measure of diversification (production, government revenue, trade), across regional and income groups and within their natural resource grouping. The data of the EDI is already informing policy pathways across governments and with international agencies around the world.
The report indicates that over time, the gap between the most and least diversified nations has mostly widened. The MENA region has witnessed a notable improvement towards the latter part of the 2010s decade as many oil exporters began to accelerate their diversification plans.
The 2023 edition of the Global Economic Diversification Index explored Covid-19’s impact on economic diversification, where the pandemic had an adverse effect on almost every sector. Globally, economic diversification may have taken a hit during the Covid-19 years, but the pandemic has also shown how economies and sectors can adapt to shocks, it said.
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