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Export diversification through resource-based industrialization: The case of natural gas

Listed author(s):
  • Massol, Olivier
  • Banal-Estañol, Albert

For small resource-rich developing economies, specialization in raw exports is usually considered to be detrimental to growth and Resource-Based Industrialization (RBI) is often advocated to promote export diversification. This paper develops a new methodology to assess the performance of these RBI policies. We first formulate an adapted mean-variance portfolio model that explicitly takes into consideration: (i) a technology-based representation of the set of feasible export combinations and (ii) the cost structure of the resource processing industries. Second, we provide a computationally tractable reformulation of the resulting mixed-integer nonlinear optimization problem. Finally, we present an application to the case of natural gas, comparing current and efficient export-oriented industrialization strategies of nine gas-rich developing countries.

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File URL: http://www.sciencedirect.com/science/article/pii/S0377221714001787
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Article provided by Elsevier in its journal European Journal of Operational Research.

Volume (Year): 237 (2014)
Issue (Month): 3 ()
Pages: 1067-1082

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Handle: RePEc:eee:ejores:v:237:y:2014:i:3:p:1067-1082
DOI: 10.1016/j.ejor.2014.02.043
Contact details of provider: Web page: http://www.elsevier.com/locate/eor

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