Economic diversification and sustainable economic growth: Evidence from Oman

Hydrocarbon revenues in Oman were 31 billion USD in 2013 and accounted for 66 percent of Oman?s exports and 39 percent of its gross domestic product (GDP), according to the Central Bank of Oman. Between 2013 and 2015, Oman?s economy knows a significant fluctuations particularly following mid-2014 oil price plunge. More precisely, Omani GDP has decreased in 2015 was $69.83 billion, compared with $81.03 billion in 2014 and $78.93 billion in 2013. Inflation in 2017 is expected to be 3.1 per cent, compared with 1.1 per cent in 2016 and 0.1 per cent in 2015.The aim of this research proposal is to examine the relationship between economic diversification and macroeconomic variables on economic growth (non-oil GDP) in Oman framework. To have a complete picture, these relationships are explored not only on the total non-oil GDP but extended to non-oil public and private GDP. Time investment horizons (short- and long-term) are considered which is crucial for investors and policy makers to make decisions. To do this, we use a nonlinear autoregressive distributed lag (NARDL) model in which short- and long-run nonlinearities are introduced through positive and negative partial sum decompositions of the explanatory variables. This proposal research provides a new evidence to the Omani authority and policy makers to diversify revenues and maintain the sustainability economic growth.