Definition
Economic diversification is the strategic process of broadening the range of industries and revenue sources within a national economy. For oil-exporting states, it typically means reducing fiscal and export dependence on hydrocarbons by developing manufacturing, services, tourism, agriculture, and technology sectors. Successful diversification lowers vulnerability to commodity price shocks and creates sustainable employment for a growing population.
Context in Oman
Oman began serious diversification planning in the 1990s, but momentum accelerated after the 2014 oil price crash exposed structural fiscal vulnerabilities. The Sultanate pursues diversification through several parallel strategies: developing industrial zones at Duqm, Sohar, and Salalah; expanding tourism infrastructure; investing in fisheries and aquaculture; promoting Oman as a regional logistics hub; and fostering a digital economy. Regulatory reforms such as the Foreign Capital Investment Law (2019), the Commercial Companies Law, and the introduction of VAT in 2021 have improved the business environment for non-oil investors.
Key Data Points
| Metric | Value |
|---|---|
| Oil share of exports (2023) | ~60 % |
| Oil share of government revenue (2023) | ~60 % |
| Non-oil sector employment share | ~85 % |
| Free zones operational | 4 (Duqm, Sohar, Salalah, Al Mazunah) |
| Key non-oil sectors | Tourism, logistics, mining, fisheries, ICT |
Vision 2040 Connection
Diversification is the foundational objective of Vision 2040. The strategy organises its economic priorities around building a productive and diversified economy, with dedicated sub-strategies for each target sector. The Implementation Follow-up Unit tracks diversification progress through composite indices that combine non-oil GDP share, export concentration ratios, and private-sector employment rates.
Further Reading
- [[What is Non-Oil GDP]]
- [[What is In-Country Value]]
- [[Oman Privatisation Programme]]