Economic Diversification For Brunei’s Samples †MyAssignmenthelp.com

Question: Discuss about the Economic Diversification For Bruneis. Answer: propositions in the Soaring of the Gulf Falcons Proposition 2, A sustainable growth model requires a diversified tradable sector, agrees more with what I propose for Bruneis economy that has been dependent on oil for along time. The fact that oil prices are dwindling globally, the need to diversify products available for export is more urgent today. The implication for diversification for Bruneis small population that mainly prefers public sector jobs is that opportunities for foreign labor will open up. The potential that exists even in tourism alone will not be satisfied with home grown labor. Diversification of exports for a country shields it from uncertain trade risks in the worlds economy. Arguments in the Missing link discussion In the discussion, The missing Link the argument that best fits the Brunei situation is that The GCC economic model rewards firms that produce in the non-tradables sector. This is especially true when it talks about the economy investing in foreign labor whose marginal wage has been set by their home country (Fund, 2014). This scenario results in low reduced cost of production for companies thereby raising profit levels. Brunei, being a small country is likely to face labor shortages arising from the projected diversification of the economy. The economy stands to gain greatly from this arrangement because the country can set wages that will always be below the product value that the workers produce. However, under the GCC arrangement, high skilled and high productivity labor may not be attracted. Lessons from Norway and Canada Oil rich countries can draw valuable lessons from Canada and Norway. Norway for example has harnessed hydro-power to meet her energy needs and has managed to ensure that there is sufficient supply for the country (Charnavoki and Dolado,2014). Although oil continues to generate revenue for the country, the alternative provided by hydro-power cushions the country from uncertainties in the oil sector in the future. The government has also managed to maintain stability in the hydro-power sector by controlling all the sources like waterfalls and rivers. Canada has successfully managed to diversify the economy by promoting a vibrant service sector and thereby providing alternatives for economic growth. The country has also diversified her trade partners from to include countries in Asia and the Middle East. Brunei can learn key lessons from this approach and explore non-traditional markets so as to prepare for possible tastes in customer preferences in the future. References Charnavoki, V., Dolado, J. J. (2014). The effects of global shocks on small commodity-exporting economies: lessons from Canada.American Economic Journal: Macroeconomics,6(2), 207-237. Fund, I. M. (2014, January 1). Soaring of the Gulf Falcons:. Retrieved September 28/9/2017, 2017, from International Monetary Fund: https://www.imf.org/external/pubs/ft/wp/2014/wp14177.pdf