Diversification and Economic Growth in Emerging Economies: The Kurdistan of Iraq Experience

Abstract

This study aims to understand the Kurdistan Region of Iraq’s experience of diversification and economic growth because the Kurdistan Region is the main source of this income from oil sales. This economic diversity can boost growth and stability. This study highlights the Kurdistan Region’s lack of economic diversity, which is part of Iraq that needs multiple income sources, so the method described is used to analyze the agriculture, industrial, and oil sectors realistically. The method used in the study is a descriptive research article. Excel program has been used to analyze the data. A productive country has a diverse economy that generates much domestic income, especially in industry (manufacturing and transportation) and agriculture, which must directly contribute to the state’s income. Diversify the state’s economy. Thus, the oil sector in the Kurdistan Region of Iraq has not driven economic growth or stability, and the fiscal balance of GDP has declined due to public revenue declines. The main result of this study is that Kurdistan’s economy is mainly dependent on oil revenues, so the Kurdistan Region is economically unstable, as oil revenues are more dependent on the global market. These revenues are related to high and low demand for energy resources. In addition, this will increase and decrease public revenue in the Kurdistan Region. To diversify the economy of the Kurdistan Region, it should pay attention to other sectors; the Kurdistan Regional Government must follow this method because the Kurdistan Region is rich in natural resources, and agriculture also has a favorable environment for the development of the industrial sector. The study suggests that oil sales revenues should be used for economic allocations rather than agriculture and industry. At the end of the study, several recommendations are presented, the most important of which is that oil revenues should be used to fund investment projects in exchange for reducing operating costs, which will lead to the development of economic infrastructure in the Kurdistan Region, attention should also be paid to other sectors to increase revenue sources.