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The Global Economic Diversification Index (EDI) 2023 says Covid -19 demonstrates how well diversified economies can better adapt to major shocks.
According to the Mohammed bin Rashid School of Government (MBRSG) at the World Government Summit in Dubai with the IMF and World Bank.
Overall, the 2023 EDI rankings show that the 10 most diversified economies remain unchanged, Wam news agency reported.
The United States, China and Germany are firmly in the top three. However, the gap between the US and China narrows from 21.6 percentage points in 2019 to 6 percentage points in 2022. The results also show that economic size is not a barrier to economic diversification, as several of the top 10 countries are relatively small economies, including Singapore, Switzerland, and Ireland, that are able to diversify their economic output base and trade change.
Developed by MBRSG in partnership with the World Government Summit, the index will expand to cover 105 countries by 2023, up from 83 countries last year. At 22 years, it continues to cover all regions, resource and non-resource economies.
The index quantifies the diversification progress of countries around the world, focusing in particular on three dimensions of diversification: output diversification, trade diversification and government revenue diversification.
The EDI is the first comprehensive global assessment of economic diversification that allows international, cross-country and regional comparisons and rankings of countries. As a policy and decision-making tool, it is designed to provide countries with a visual overview of their global ranking for each diversification measure (production, government revenue, trade) within regions and income groups, as well as within the natural resources group. EDI’s data already informs the policy paths of governments and international agencies around the world.
The gap between the most and least diverse countries has mostly widened over time, the report noted. The Middle East and North Africa region saw a marked improvement in the late 2010s as many oil exporters began to accelerate their diversification plans.
The 2023 edition of the Global Economic Diversification Index explores the impact of Covid-19 on economic diversification, with the pandemic adversely affecting almost all sectors. Globally, economic diversification may have taken a hit during Covid-19, but the pandemic has also shown how economies and sectors are adapting to shocks, it said.
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