Economic diversification and industrial development

Economic diversification and industrial development

Many advanced countries, which mostly lack natural resources, excel in both technological and non-technological manufacturing across various sectors. For example, Japan is renowned for its automobile manufacturing, Germany for machinery, and Korea for technological goods. Each country excels in its leading industries within certain sectors. However, these countries do not confine themselves to manufacturing specific types of goods; rather, they open up to other industries that can drive economic growth, create more job opportunities, and increase innovation and leadership in the industrial sector.

As mentioned above, countries like Germany, the United States, Japan, Korea, and France have various industries such as pharmaceuticals, weapons, technological goods, automobiles, computer and electronics manufacturing, and more.

However, these countries have developed these industries over decades. So how can countries like Bahrain begin to catch up with the industrial diversification in these nations, which in turn boosts exports and gross domestic product (GDP) in the industrial sector, aiming for the economic diversification sought by Bahrain as part of the Vision 2030 economic agenda?

One of the most important key steps that can be designed with the participation of all stakeholders is to formulate a comprehensive strategy for the industrial sector. A detailed study of the industrial sectors in Bahrain and how they can be developed should be conducted. Kenichi Ohno, a Japanese expert in development economics and international finance, mentions in his book “A History of Economic Development in Japan” that Japan was a backward country and needed to align with technological advancements in advanced European and American countries to achieve technological development goals. Ohno emphasizes that Japan’s economic vision must be based on a thorough analysis of global trends and that “there is a real need to design and implement a comprehensive and precise plan for reconstruction.” He suggests that “each important industrial sector should be analyzed accurately, and precise and realistic promotional programs should be proposed.” Ohno further states that “Japan should focus on industries that rely on skilled labor intensification.”

Therefore, Ohno points out that Japan has taken two important steps: first, developing a comprehensive plan and conducting an in-depth study of the industrial sectors that Japan aims to develop.

Secondly, Japan began sending missions to study these industries abroad, in addition to attracting foreign investments for these industries from abroad to transfer experience and knowledge to the domestic sector and develop these industries domestically.

Due to the significant progress of many industries in advanced countries, it is challenging for Gulf Arab countries to start from scratch to keep up with industrial development in these countries. Therefore, the relative advantage or relative progress of these countries poses a significant obstacle to Gulf Arab countries. However, there are some solutions proposed by Ohno in his book on how to develop local industrial sectors. The author suggests that one of the solutions to follow is to draw up a comprehensive strategic plan for the industrial sector through detailed studies on how to transform the industrial sector in Bahrain and how to open up new industries locally that can drive economic growth, create more job opportunities, and intensify skilled labor. This strategy must be clear and comprehensive in achieving its goals, and cooperation among stakeholders is essential in drawing up these plans and taking into account their different opinions on how to achieve these proposed goals.

The second step comes from the perspective of attracting technological industries from foreign countries that excel in these industries. This contributes to transferring expertise and knowledge and further developing this sector in the future. However, before that, we must know what challenges and obstacles stand in the way of attracting these industries domestically. Are there any laws or regulations hindering? Are investors and businessmen lacking clear guiding principles on how to open such industries? For example, are there specific laws and regulations related to the automotive industry in Bahrain? And how much time does it take to open a car manufacturing company, pharmaceutical factory, or others? These questions, despite their simplicity, are crucial for businessmen and investors. Plans related to the industry must ensure a clear methodology in dealing with and addressing these problems and continuously testing them to ensure the achievement of the goals set by the state.

Note: This article has been automatically translated.

Source: Akhbar Alkhaleej

Ali Faqeeh, Research Associate

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