The Velocity of Economic Diversification

As a total newb to blogging, I suppose I’ll begin on a productive note and publish my recent thesis, submitted to fulfill the graduation requirements of the Master of International Business (MIB) program at The Fletcher School.  The topic reflects my long-held personal and professional interests in the evolution of economic complexity and the controversial roles of institutions of economic development.

ABSTRACT

Is there a speed limit to productive diversification?  What does rapid diversification entail in terms of resource requirements for economic governance? Complementing existing literature on the benefits of diversification for economic development, I examine the public sector labor requirements associated with the diversification of output across economic sectors.  Evidence from time-series and panel data for 16 countries, as well as the case of Abu Dhabi’s economic transformation since 1975, suggests that aggressive diversification may lead to problematic imbalances between public and private sector employment.  In view of these potential imbalances, I argue that policymakers should be less aggressive and more deliberate in their pursuit of productive diversification and adopt priorities to optimize the pace of achieving their economic development aspirations.

Full text: MIB Thesis – Fabyanske – 2010.

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