Thursday, July 19, 2007

Freeing Ouselves of Oil

Oman’s growth and development has been fueled by Oil revenues. The nature of Oil is that it is finite, and everyone knows that a day will come when it must run out. Although no one agrees on how long it will be before oil in Oman becomes a thing of the past, the country realizes that it must diversify its source of revenue.
As a citizen I was excited to see a July article by Oman Economic Review (OER), stating that non-oil revenues have increased by 46.3% from 2005 to 2006. Initially, I thought that this was an anomaly but the article clearly explains that non-oil exports have been increasing at around 30% during the previous 3 years.
A breakdown of exports raises another concern. Oman has decreased its dependence on Oil, however it remains a resource based economy. The principal portion of non-oil revenues is in the form of minerals, another finite resource. Additionally, the 46.3% increase in exports is due to the 327% increase in mineral exports. All while, textiles and food/Agriculture experienced a decline.
The diversification efforts are welcomed, and I’m excited to see new sources of revenue. Yet I ask; do we remain depended on the resources of the land? I look forward to the day we begin to export knowledge, services and man made products.

3 comments:

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dillon said...

You are right to be a little worried about the dependence on natural resources in the export market. More worrying to me is that all the figures shown represent monetary increases rather than volume increases. In other words, it appears to me that the big rises reported are due mainly to the sharp increases in world prices rather than an improvement in output volumes or quality. I would like to see a more detailed analysis of these figures. If world prices drop then how badly hit will be the Oman economy? Luckily, natural resource prices, although slightly weaker in recent months, remain strong and will probably stay strong for another few years. Unless there is a world economic downturn because that would hit Oman with a double whammy and that is something the economy does not need.

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