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Export diversification and resource-based industrialization : the case of natural gas

Author

Listed:
  • Olivier Massol

    () (IFPEN - IFP Energies nouvelles - IFPEN - IFP Energies nouvelles)

  • Albert Banal-Estañol

    (Université de Londres - Université de Londres)

Abstract

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.

Suggested Citation

  • Olivier Massol & Albert Banal-Estañol, 2014. "Export diversification and resource-based industrialization : the case of natural gas," Post-Print hal-01031565, HAL.
  • Handle: RePEc:hal:journl:hal-01031565
    DOI: 10.1016/j.ejor.2014.02.043
    Note: View the original document on HAL open archive server: https://hal-ifp.archives-ouvertes.fr/hal-01031565
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    References listed on IDEAS

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    Cited by:

    1. Balavac, Merima & Pugh, Geoff, 2016. "The link between trade openness, export diversification, institutions and output volatility in transition countries," Economic Systems, Elsevier, vol. 40(2), pages 273-287.
    2. Joya, Omar, 2015. "Growth and volatility in resource-rich countries: Does diversification help?," Structural Change and Economic Dynamics, Elsevier, vol. 35(C), pages 38-55.
    3. Hache, E. & Massol, O., 2016. "Sanctions against Iran: An assessment of their global impact through the lens of international methanol prices," Working Papers 14973, Department of Economics, City University London.

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