Export diversification through resource-based industrialization: The case of natural gas

Olivier Massol and Albert Banal-Estanol

European Journal of Operational Research, 2014, vol. 237, issue 3, 1067-1082

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.

Keywords: OR in developing countries; Mean-variance portfolio model; Efficiency measure; Development planning; Resource-based industrialization; Export earnings volatility (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:237:y:2014:i:3:p:1067-1082

DOI: 10.1016/j.ejor.2014.02.043

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