Urgency towards economic diversification through effective reforms in Caspian Basin
Dec 04, 2020
DOI: http://dx.doi.org/10.15549/jeecar.v7i3.326
Published in: JOURNAL OF EASTERN EUROPEAN AND CENTRAL ASIAN RESEARCH
This paper highlights that, in the Caspian Basin, the COVID-19 pandemic and oil price fluctuations have cast negative impacts on oil-exporting economies. These resource-abundant economies have faced revenue contraction and dwindling budget expenditures due to oil price changes. This study has examined export and economic diversification analyses for all economies and has concluded that the Caspian region cannot achieve full economic diversification due to over-dependence on oil revenues. Most of the export-oriented sectors consist of minerals and oil and gas, neglecting the more sustainable growth of non-resource tradable sectors. As a result, the export diversification index demonstrates that a huge share of exports in these countries is mainly natural resources. Economic diversification, which is based on sectoral value-added, also indicates that these countries show some signs of diversity, but the utmost need to have structural reforms and policy instruments to diversify their revenue stream remains. However, with the passage of time and a renewable energy strategy, these economies will achieve economic diversification targets.