Multi-Sectoral Productivities and Interlinkages: The Case of Oman

Countries that derive the bulk of their revenue from a single natural resource are vulnerable to uncertainties such as how long that revenue would continue, resource price volatility, and changes in demand, or even substitution. Their future economic sustainability and growth, therefore, depend on the identification of new revenue streams in the short- or long-term. The Sultanate of Oman represents a useful case study of this process as it now seeks to reduce five decades-worth of dependency on Mining and Quarrying (M&Q) sector income and create a more diversified economy. The overall objective of this study is to contribute to the discussions of how this transformation and diversification can take place. The specific aim of this thesis is to use input factor analysis and multi-sectoral linkages analysis to identify the non-M&Q tradable sectors with large productivity and productivity growth performances, strong multi-sectoral interplay and structural linkages to other sectors within Oman’s economy, during the period 1998–2016. The results showed that the M&Q boom, and specifically the government expenditure funded by the M&Q revenue, has been the main driver of development and expansion of the non-M&Q sectors in the Oman’s economy. The input factors analysis showed that output growth in Oman’s economy has been heavily driven by capital investment and labour accumulations, and less by technology. The agriculture and fisheries, manufacturing and financial intermediation sectors were the tradable sectors that showed the highest technology contribution. The multi-sectoral linkages analysis showed that the M&Q sector was working almost in isolation from other sectors, whereas the non-M&Q tradable sectors were the sectors with the strongest linkages in the economy, especially the manufacturing sector. The thesis concluded that Oman’s future economic growth is dependent on a policy of reallocating current M&Q income towards the main non-M&Q tradable and productive sectors.