The Contribution of Economic Diversification to Economic Growth in Algeria: An Econometric Study for the Period (1990–2023)

Abstract

Economic diversification is one of the important topics that concerns policymakers worldwide. Economic diversification reflects countries’ desire to reduce reliance on a single economic sector or a limited group of sectors to achieve sustainable and inclusive economic growth. This approach responds to the challenges of globalization, ongoing shifts in global markets, and repeated economic crises that have highlighted the fragility of single-sector economies.

Economic diversification significantly contributes to enhancing economic growth through multiple channels. It boosts the economy’s ability to adapt to external shocks, increases employment opportunities, supports innovation and technological development, and improves the balance of payments by reducing trade deficits. Additionally, economic diversification enables more efficient use of natural and human resources, which enhances productivity and increases national income.

In this context, this research paper aims to measure the impact of economic diversification on economic growth in Algeria over the period (1990-2023), using non-oil exports as an indicator of economic diversification. Employing econometric tools to analyze the data collected on the study variables for the period 1990-2023, it was found that there is a negative relationship between non-oil exports and economic growth during the study period. This finding confirms the weak level of economic diversification in Algeria during the period examined.