Many countries have sensed the need to diversify their economies and have created visions and strategies for the diversification of the economy. However, their attempts to diversify their economies have met with little success.
For these countries to be successful in diversification they need to have strong factors to support the efforts for economic diversification and development. Factors will serve the economy and the nation to build its capabilities and make sure the efforts for diversification are a success.
The "Wheel of Diversification and Development" is a framework that can be used by governments to diversify their economies. The model has identified factors that are essential to the diversification of the economy and without proper output of these factors a successful diversification would be difficult.
The model includes 9 factors divided into three wheels: the outer wheel is represented by the factor "Natural Resources and Financial Funding", which is necessary for economic growth. The middle wheel is represented by the three factors "Human Development", "Policy, Institutions and Governance", and "Infrastructure". These factors are very necessary for building the capability of the economy to develop and diversify. The inner wheel is represented by five factors, "Export Orientation", "Innovation", "Entrepreneurship", "Private Sector" and "State-Owned Enterprises". These factors are the ones that support the transfer of the capabilities from the factors of the outer wheels into products or services that can compete globally and maintain their competitive advantage and thus lead to the diversification of the economy.
Using Singapore as an example of the success of economic diversification, the model was applied to Singapore to evaluate how the factors need to be applied to create successful diversification efforts. Subsequently, the model was used to evaluate the progress of Abu Dhabi's economy on these factors and highlight the weaknesses that constrain Abu Dhabi from diversifying its economy. Similarly, the model was also used to evaluate the progress of GCC countries in their diversification efforts and identify the weaknesses present.
This book includes recommendations about what strategies need to be improved for the development of the diversification model factors so that the goals of diversification and development of the economy can be achieved.