ALGIERS, Algeria, May 22. Economic diversification should be seen in a wider context beyond just industrial development, said Areef Suleman, Chief Economist of the Islamic Development Bank Group (IsDB), Trend’s special correspondent reports.
Speaking at the panel discussion "From Vision to Action: Economic Diversification as a Lever for Structural Transformation" during the IsDB Annual Meetings in Algiers, Suleman emphasized that diversification is much more than just industrial variety.
"And what's really important to understand in terms of diversification is not merely about industrial diversification. It has to be looked at from this perspective. Now, from an Islamic development perspective, if we look at diversification, we're looking at it from the perspective of industrialization of the country, the manufacturing that we have, export market concentration, export trade problems, etc. It's a much broader concept than merely looking at it from the perspective of the extent of the manufacturing that we have," he noted.
Suleman also noted that, over the past twenty years, the industrial sector has been like a ship stuck in the mud, with only a few bright spots in Africa, which began its journey from rock bottom. In the meantime, the winds of change are blowing in the Middle East.
“On the export market concentration, the Middle East is doing a lot better, and we're starting to see the fruits of the transformation initiatives and efforts that are taking place in the Middle East. And, you know, we should mention that Saudi Arabia is one of those bold initiatives to transform their economies and diversify them,” he highlighted.
The official further explained that, in the current unstable global environment, diversification has become an essential tool for enhancing the resilience of economies.
"If one looks at the era we're living in at the moment, we're moving from crisis to crisis. People have termed this a body crisis. We, every now and then, get balls, etc. A thermal crisis. So we're living in a continuous state of crisis. And one needs to build resilient economies. Now, as one diversifies the economy, you build resilience; you are able to withstand the shocks better," Suleman said.
Suleman also shone a light on the link between diversification and inclusive growth, showing how they go hand in hand.
“So that's why diversification is important in terms of being able to withstand and resist those shocks to some extent. On the employment generation, that's been discussed. On the employment generation, that's been discussed. But I think also equally important is the fact that it brings more people into the labor market; you look at higher levels of inclusivity, so a key element to tie and assist with inclusive growth. So sustainable development and inclusive growth are key elements and aspects. And for those countries that are in the middle-income practice, it's one way of trying to get out of it as well, by diversifying the economy and broadening the industrial base, and we also started to see a lot of employment towards the sector and high-value services as well," he added.
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