The Economic Diversification and Sustainability Development in Oil-Rich Countries: A Panel Data Study

Department of Business Administration, University College Bahrain, 2314 Rd No 2314 Saar, Kingdom of Bahrain

^* Corresponding author: mrizky@ucb.edu.bh

Abstract

Diversifying income sources in oil-producing countries is necessary for achieving financial sustainability and a pathway to a more prosperous future. Despite the recognized importance of diversification, there remains a research gap in understanding the combined impact of factors like capital formation, oil rents, foreign investment, labor dynamics, rule of law, and CO₂ emissions on sustainable growth. This research delves into the nexus between economic diversification and sustainable development in GCC countries, aiming to identify the key factors influencing economic diversification in this region. The study meticulously analyzes the impact of these critical variables on the economic diversification efforts of GCC countries. The findings reveal a robust positive correlation between economic diversification and these influential factors, as measured by GDP. This correlation underscores the potential benefits of economic diversification, such as enhanced sustainability and resilience, reinforcing the importance of this research topic. Also, the study emphasizes the urgent need for GCC countries to invest in non-oil economic sectors.