## The Third National Development Strategy (NDS3) lays out plans to build a knowledge-based

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### Overview and NDS3 strategic priorities
- NDS3 emphasizes building a knowledge-based economy to boost growth potential, focusing on export diversification as a pillar of broader economic diversification given the small size of domestic markets in Qatar.
- Gaps identified to be closed: innovation, human capital, and the regulatory environment.
- Selected priority sectors: manufacturing (petrochemicals, plastic products, and low-carbon metals), ICT, and education.
- NDS3 policy levers:
  - Harmonizing economic zones to help attract FDI.
  - Boosting international trade, including through additional agreements with key target markets.
  - Public-Private Partnership (PPP) to facilitate private sector participation.

### Qatar’s progress in export diversification and sectoral patterns
- Services exports expanded notably over the last two decades, including transport, tourism, and ICT.
- Goods exports remain less diversified: minerals dominate goods exports and are relatively isolated in the product space from higher-complexity products.
- Numerical snapshots:
  - Qatar: Total Exports, 1995 ($3.5 bn, ECI = -0.72).
  - Qatar: Total Exports, 2021 ($10b bn, ECI = -0.41).
  - Qatar’s medium- and high-tech manufacturing exports were around 2 percent in 2019 (baseline used in regression interpretation).

### Determinants of export diversification and per-capita income (econometric findings)
- Empirical setup:
  - Dependent variables: medium- and high-tech exports (percent of total goods exports, in log) and per-capita real income (in log).
  - Explanatory variables: economic complexity, human capital, physical capital, employment-to-population ratio; interaction terms between economic complexity and human or physical capital.
  - Data: annual data 1960–2019 for export regressions; non-overlapping 5-year averages for per-capita real income regressions (1960-64, 1965-1969, ..., 2010-19); panel of 133 countries.
  - Models: pooled, fixed-effects, random-effects; Hausman tests favor fixed-effects.
- Key empirical findings:
  - Economic complexity is positively associated with medium- and high-tech manufacturing exports across pooled, fixed-effects, and random-effects specifications.
  - Human capital is an important positive factor for export diversification; physical capital is not statistically important for export diversification in these estimates.
  - Interaction effects: the association of economic complexity with per-capita real income is amplified when human capital and physical capital are higher.

### Quantitative impacts and simulated magnitudes
- Export diversification into medium- and high-tech manufacturing:
  - Using statistically significant coefficients from model 6: a one-unit increase in economic complexity (equivalent to one standard deviation in the sample) would increase Qatar’s medium- to high-tech manufacturing exports by 8–9 percentage points of total goods exports (from around 2 percent in 2019).
  - Increasing economic complexity to the level of Malaysia’s would imply an increase of 12–13 percentage points in Qatar’s medium- to high-tech manufacturing export share.
- Per-capita real output simulations:
  - A one standard deviation increase in economic complexity has an impact of 20 percentage points on per-capita real output when human and physical capital are at the average levels across country and time.
  - The growth impact of a one standard deviation increase in economic complexity rises to 30 percentage points when human and physical capital are above the average by one standard deviation.
  - Relative contributions (illustrative): human capital is the largest single contributor to per-capita real output; physical capital is important but smaller; the marginal impact of additional physical capital is smaller for Qatar given its already large and high-quality physical capital stock.

### Technology and Innovation Policy (TIP) role and NDS3 alignment
- TIP is proposed to boost economic complexity and thereby per-capita income durably; TIP complements Qatar’s strong capital stock and planned human capital investments under NDS3.
- TIP thrust aligns with NDS3 strategic priorities: support domestic sophisticated industries (sometimes beyond current comparative advantage) with an export orientation when domestic markets are small.
- Guiding principles:
  - Support domestic sophisticated, export-oriented industries to build capabilities.
  - Fierce competition with strict accountability to support productivity gains.
  - Target policies that build capabilities to make entry into more complex products feasible over time.

### Cross-country lessons on diversification strategies (Korea, Malaysia, Chile)
- Strategy characterizations:
  - Korea: “Moonshots” — reached for high-value, complex products and achieved very strong growth.
  - Malaysia: “Leapfrog” — achieved substantial growth and higher value-added exports but less rise in economic complexity than Korea.
  - Chile: “Snail crawl” — remained reliant on commodity exports (copper, agricultural products) with stagnant economic complexity and more modest growth relative to Korea and Malaysia.
- Comparative growth performance cited:
  - Korea: lifted real per-capita income from less than 10 percent of the US to nearly 70 percent of the US and registered 8 percent average growth over and above the US.
  - Malaysia: average annual growth rate was 6 percent over the US.
  - Chile: average annual growth rate was 4.5 percent over the US.

### Korea’s goods export diversification: mechanisms and outcomes
- Korea’s economic complexity evolution and trade:
  - ECI rose from ~0.9 in 1995 to ~1.9 in 2021 (noted as “more than doubled from 0.9 in 1995 to 1.9 in 2021”).
  - Total goods trade rose from $150 billion in 1995 to $803 billion in 2021.
  - Shifted exports from lower-complexity products (textiles, agriculture) toward higher-complexity products (chemicals, machinery, electronics).
- Feasible-opportunity analysis: as Korea’s capabilities expanded, diversification into higher-complexity products became more feasible between 1995 and 2021.

### Korea’s feasible opportunities (1995 vs 2021) — selected empirical points
- Distance empirical minimum value: around 0.4-0.5.
- Korea’s shortest distance: around 0.7.
- Korea ECI values: 1995 (ECI = 0.85); 2021 (ECI = 1.93).
- Interpretation:
  - 1995 (ECI = 0.85): low complexity products (textile, agriculture) were easier to diversify into and less distant.
  - 2021 (ECI = 1.93): more complex products became less distant than less complex products; product mix and capabilities made electronics and machinery more feasible.

### Key lessons for Qatar (human capital, FDI, services, competitive environment)
- Human capital:
  - Korea invested in general, vocational education, and health care.
  - Malaysia created the Human Resources Development Fund and programs to study abroad; implemented TalentCorp programs including a 10-year renewable visa for highly skilled expatriate workers.
  - Given importance of foreign workers, policies to attract and retain skilled workers were important.
- TIP/economic zones and FDI linkages:
  - Korea: strict accountability for government support, intense competition, pressure to export, and local technology creation over several decades built comparative advantages.
  - Malaysia: emphasized technology transfers and international competition; MNCs supported export sophistication but technology diffusion was limited in some cases; linkages of FDI and free trade zones with the onshore economy were weak.
  - Qatar: FDI in the non-hydrocarbon economy is low overall though inflows in high value-added sectors (Chemicals and ICT) are rising.
  - Policy implications: intensify efforts to boost financial depth, human capital, institutions, and labor market flexibility to attract FDI; maximize domestic spillovers from FDI; boost R&D spending to sustain patenting trends.
- Services:
  - Some services exports (e.g., tourism) bolster the non-hydrocarbon economy but would not generate sustained productivity and growth gains alone.
  - Highly productive, modern tradable services (telecommunications, logistics and delivery, financial services) reduce transaction costs and elevate growth potential, especially with competition-enhancing policies.
  - Qatar: visitor arrivals have risen structurally; tourism can leverage high-quality infrastructure and help attract high-skilled expatriates but does not replace need to diversify into more complex manufacturing and service exports.
  - Existing logistics infrastructure in Qatar would support manufacturing exports.
- Competitive environment:
  - Reduce the state’s footprint, upgrade regulatory environment, and ensure a level playing field to facilitate private investment and boost production of more complex products.
  - Intense domestic and international competition amid export pressures underpinned Korea’s success.
  - Qatar’s trade conditions: many trade and other agreements and generally low trade barriers; further foster trade diversification by reducing remaining tariff and non-tariff barriers, exploring new trade corridors (Middle Corridor from China to Europe; India-Middle East-Europe Corridor), and investing in the digital economy.

### Policy priorities for Qatar to diversify goods exports
- Strategic orientation:
  - NDS3 focuses on downstream hydrocarbon products (petrochemical) characterized as a “Snail crawl” or at most “Leapfrog” strategy.
  - Given most products are similarly distanced for Qatar, reaching for products with higher complexity (akin to “Moonshots”) would generate greater productivity and growth gains.
  - Complementarity consideration: leverage Qatar’s comparative advantage in logistics and connectivity through seaports and airports.
  - Regional strategy: diversify into sectors that are different from, or complement, those targeted by other GCC countries.
- Intensify reforms in key areas:
  - Human capital: further enhance human capital relative to Qatar’s high level of physical capital; intensify measures to attract and retain skilled expatriate workers.
  - FDI: boost financial depth, human capital, institutions, and labor market flexibility; ensure PPPs are mindful of fiscal risk; maximize domestic spillovers from FDI.
  - Competitive environment: reduce state footprint, upgrade regulatory environment, ensure level playing field, and foster competition.
  - Trade and digital economy: reduce remaining tariff and non-tariff barriers; explore new trade corridors; invest in the digital economy.

### Vertical policies: DOs and DO NOTs
- DOs:
  - Targeted, time-bound, cost-effective, transparent interventions that deliver on objectives.
  - Clearly identify social goals (e.g., emission reductions).
  - Ensure strong domestic knowledge spillovers from innovation in targeted sectors.
  - Ensure sufficient administrative capacity.
  - Conduct proper cost-benefit analysis and impact evaluation, with strict exit criteria, claw-back mechanisms, and sunset clauses.
  - Ensure targeted interventions do not substitute for broad-based structural reforms.
- DO NOTs:
  - Avoid vertical policies that create negative effects on macroeconomic, fiscal, and external sustainability.
  - Avoid generating negative cross-border spillovers, harming trading partners, or violating international commitments.

### Key empirical and statistical notes (selected figures and model outputs)
- Distance empirical minimum value: around 0.4-0.5.
- Korea’s shortest distance: around 0.7.
- Korea ECI values: 1995 (ECI = 0.85); 2021 (ECI = 1.93).
- For Qatar, feasible opportunities are relatively distant, close to 1 (the maximum in the framework).
- Figure 9 indicators and trends highlighted:
  - Annual FDI Commitments by Sector (US$ billions, period average) and by Industry (percent of total non-hydrocarbon) show rising shares for Chemicals and IT/software.
  - R&D Spending and Economic Complexity: R&D spending (%GDP, log, 2020 or 2021) plotted against Economic complexity index (2021).
  - Total Patent Applications (Per one million population) show Qatar’s patent applications jumped in the last decade.
  - Indicators of Trade Barriers, 2021: tariff and non-tariff barriers and time cost of importing/exporting reported as deviations from 165 country-mean in standard deviation.
  - Estimated Manufacturing Export Gaps reported as percent of potential.
- Annex I highlights:
  - Determinants of Mid and High-tech Exports: models with number of observations up to 2,080; R-squared up to 0.622; Economic complexity index coefficients reported (e.g., 1.374***, 0.840***, 0.723***, 0.869***, 0.807***, 0.764***, 1.017***, 0.918***, 1.010***, 1.028***, 0.946***).
  - Determinants of Per-capita Real Income: Economic complexity index coefficients reported across models (e.g., 0.714***, 0.134***, 0.098***, -0.103, 0.328***, 0.141***, -0.069); interaction terms Economic complexity x physical capital (0.119**; 0.122**), Economic complexity x human capital (0.068*; 0.069*); number of observations up to 1,316; R-squared up to 0.685.

### Concluding remarks
- Empirical analysis and country experience suggest Qatar could boost growth potential by building a knowledge-based economy focused on enhancing export diversification into higher technology manufacturing products.
- Policy priorities:
  - Focus beyond sectors with current comparative advantages to develop sectors with high complexity.
  - Strong focus on attracting and developing human capital, technology, private sector investment into high value-added non-hydrocarbon activities, and fostering a competitive environment.
  - Carefully assess the role of services to support high value-added manufacturing exports and long-term growth potential.
  - Weigh benefits of vertical policies against potential pitfalls and ensure complementariness with horizontal reforms.

*Source: IMF staff chapter content (sipea2025017).*

### 1. The Third National Development Strategy (NDS3) lays out plans to build a knowledge-based

### The Third National Development Strategy (NDS3) lays out plans to build a knowledge-based

### Overview and NDS3 strategic priorities
- NDS3 emphasizes building a knowledge-based economy to boost growth potential, focusing on export diversification as a pillar of broader economic diversification given the small size of domestic markets in Qatar.
- NDS3 identifies gaps to be closed: innovation, human capital, and the regulatory environment.
- NDS3 selected priority sectors include manufacturing (petrochemicals, plastic products, and low-carbon metals), ICT, and education.
- NDS3 policy levers highlighted:
  - Harmonizing economic zones to help attract FDI.
  - Boosting international trade, including through additional agreements with key target markets.
  - Public-Private Partnership (PPP) to facilitate private sector participation.

### Qatar’s progress in export diversification and sectoral patterns
- Services exports expanded notably over the last two decades, including transport, tourism, and ICT.
- Goods exports have been less diversified: minerals dominate goods exports and are relatively isolated in the product space from higher-complexity products.
- Numerical snapshots (as presented in the source figures):
  - Qatar: Total Exports, 1995 ($3.5 bn, ECI = -0.72).
  - Qatar: Total Exports, 2021 ($10b bn, ECI = -0.41).
  - Qatar’s medium- and high-tech manufacturing exports were around 2 percent in 2019 (baseline used in regression interpretation).

### Determinants of export diversification and per-capita income (econometric findings)
- Empirical setup:
  - Dependent variables: medium- and high-tech exports (percent of total goods exports, in log) and per-capita real income (in log).
  - Explanatory variables: economic complexity, human capital, physical capital, employment-to-population ratio; interaction terms between economic complexity and human or physical capital.
  - Data: annual data 1960–2019 for export regressions; non-overlapping 5-year averages for per-capita real income regressions (1960-64, 1965-1969, ..., 2010-19); panel of 133 countries.
  - Models: pooled, fixed-effects, random-effects; Hausman tests favor fixed-effects.
- Key empirical findings:
  - Economic complexity is positively associated with medium- and high-tech manufacturing exports across pooled, fixed-effects, and random-effects specifications.
  - Human capital is an important positive factor for export diversification; physical capital is not statistically important for export diversification in these estimates.
  - Interaction effects: the association of economic complexity with per-capita real income is amplified when human capital and physical capital are higher.

### Quantitative impacts and simulated magnitudes (preserving source numbers)
- Export diversification into medium- and high-tech manufacturing:
  - Using statistically significant coefficients from model 6: a one-unit increase in economic complexity (equivalent to one standard deviation in the sample) would increase Qatar’s medium- to high-tech manufacturing exports by 8–9 percentage points of total goods exports (from around 2 percent in 2019).
  - Increasing economic complexity to the level of Malaysia’s would imply an increase of 12–13 percentage points in Qatar’s medium- to high-tech manufacturing export share.
- Per-capita real output simulations:
  - A one standard deviation increase in economic complexity has an impact of 20 percentage points on per-capita real output when human and physical capital are at the average levels across country and time.
  - The growth impact of a one standard deviation increase in economic complexity rises to 30 percentage points when human and physical capital are above the average by one standard deviation.
  - Relative contributions (illustrative): human capital is the largest single contributor to per-capita real output; physical capital is important but smaller; the marginal impact of additional physical capital is smaller for Qatar given its already large and high-quality physical capital stock.

### Technology and Innovation Policy (TIP) role and NDS3 alignment
- TIP is proposed to boost economic complexity and thereby per-capita income durably. TIP complements Qatar’s strong capital stock and planned human capital investments under NDS3.
- TIP thrust aligns with NDS3 strategic priorities: support domestic sophisticated industries (sometimes beyond current comparative advantage) with an export orientation when domestic markets are small.
- Principles highlighted:
  - Support domestic sophisticated, export-oriented industries to build capabilities.
  - Fierce competition with strict accountability to support productivity gains.
  - Policies can target building capabilities that make entry into more complex products feasible over time.

### Cross-country lessons on diversification strategies (Korea, Malaysia, Chile)
- Characterization of strategies:
  - Korea: “Moonshots” — reached for high-value, complex products and achieved very strong growth.
  - Malaysia: “Leapfrog” — achieved substantial growth and higher value-added exports but less rise in economic complexity than Korea.
  - Chile: “Snail crawl” — remained reliant on commodity exports (copper, agricultural products) with stagnant economic complexity and more modest growth relative to Korea and Malaysia.
- Comparative growth performance cited:
  - Korea achieved the largest gains, lifting real per-capita income from less than 10 percent of the US to nearly 70 percent of the US and registering 8 percent average growth over and above the US over the period discussed.
  - Malaysia’s average annual growth rate was 6 percent over the US.
  - Chile’s average annual growth rate was 4.5 percent over the US.

### Korea’s goods export diversification: mechanisms and outcomes
- Korea’s product space evolution (1995 to 2021):
  - Korea’s economic complexity increased substantially: reported values indicate ~0.9 in 1995 and ~1.9 in 2021 (the source notes “more than doubled from 0.9 in 1995 to 1.9 in 2021”).
  - Korea’s total goods trade rose from $150 billion in 1995 to $803 billion in 2021.
  - Korea shifted from exports concentrated in lower-complexity products (textiles, agriculture) toward higher-complexity products (chemicals, machinery, electronics).
  - The product-space visualization and feasible-opportunity analysis show that what was “easier” to diversify into in 1995 (lower complexity goods) became different by 2021, with diversification into higher-complexity products becoming more feasible as Korea’s capabilities expanded.

*Source: IMF staff analysis from "sipea2025017 - 1. The Third National Development Strategy (NDS3) lays out plans to build a knowledge-based" (selected issues paper).*

### 13. Korea’s feasible opportunities suggest that the country’s capabilities to diversify into more

### 13. Korea’s feasible opportunities suggest that the country’s capabilities to diversify into more complex goods have increased over time

### Korea’s feasible opportunities and economic complexity
- Horizontal axis in Figure 7: distance measuring ease of diversification; empirical minimum value is around 0.4-0.5 (e.g., for Germany); Korea’s shortest distance is around 0.7.
- Vertical axis in Figure 7: product complexity rising from textile and agriculture to electronics and machinery.
- 1995 (ECI = 0.85):
  - Low complexity products (textile, agriculture) were easier to diversify into and less distant.
  - More complex products (electrical, machinery) were less easy to diversify into and more distant.
  - Feasible opportunity was tilted to the right.
- 2021 (ECI = 1.93):
  - As Korea’s economic complexity rose (the broken horizontal line moved up), more complex products became less distant than less complex products.
  - Dots were tilted to the left, indicating existing product mix, know-how and production capabilities were more conducive to diversify into electronics and machinery.

### Key lessons from cross-country experiences relevant for Qatar
- Human capital:
  - Korea invested in general, vocational education, and health care.
  - Malaysia created the Human Resources Development Fund and programs to study abroad; implemented TalentCorp programs including a 10-year renewable visa for highly skilled expatriate workers.
  - Given importance of foreign workers, policies to attract and retain skilled workers were important.
- TIP/economic zones and FDI linkages:
  - In Korea, strict accountability for government support, intense competition, pressure to export, and local technology creation over several decades built comparative advantages.
  - Malaysia emphasized technology transfers and international competition; MNCs supported export sophistication but technology diffusion was limited in some cases; linkages of FDI and free trade zones with the onshore economy were weak.
  - Malaysia was less successful in developing comparative advantage in high value-added goods.
- Services:
  - Some services exports (e.g., tourism) bolster non-hydrocarbon economy but would not generate sustained productivity and growth gains.
  - Highly productive, modern tradable services (telecommunications, logistics and delivery, financial services) reduce transaction costs and elevate growth potential, especially with competition-enhancing policies (IMF, 2024b).
  - Chile’s strategy focusing on agriculture achieved intended diversification but limited long-term growth dividends.
  - In Qatar, visitor arrivals have risen structurally; tourism can leverage high-quality infrastructure and help attract high-skilled expatriates but does not replace need to diversify into more complex manufacturing and service exports.
  - Existing logistics infrastructure in Qatar would support manufacturing exports.

### Policy priorities for Qatar to diversify goods exports
- Feasible opportunities and complexity (Figure 8):
  - Malaysia’s feasible opportunities are less distant than Qatar’s and tilted to the left (diversifying into higher complexity products is in some cases easier).
  - Opportunities for Qatar are relatively distant, close to 1 (the maximum in the framework).
  - NDS3 focuses on downstream hydrocarbon products (petrochemical) characterized as a “Snail crawl” or at most “Leapfrog” strategy.
  - Given most products are similarly distanced for Qatar, reaching for products with higher complexity (akin to “Moonshots”) would generate greater productivity and growth gains.
  - Complementarity consideration: given Qatar’s comparative advantage in logistics and connectivity through seaports and airports, sectors leveraging them could deliver greater gains.
  - Regional strategy: diversifying into sectors that are different from, or complement, those targeted by other GCC countries could generate greater gains.
- Intensify reforms in key areas (Figure 9):
  - Human capital:
    - Qatar has made progress in education attainment but has further room to enhance human capital relative to high level of physical capital.
    - Korea and Malaysia’s success hinged on strong focus on human capital building and aggressive diversification strategies.
    - Given expatriate workers represent a large share of total labor in Qatar, measures to attract and retain skilled expatriate workers should be intensified, similar to Malaysia’s case.
  - FDI:
    - FDI in Qatar’s non-hydrocarbon economy is low overall though inflows in high value-added sectors (Chemicals and ICT) are rising.
    - Intensify efforts to boost financial depth, human capital, institutions, and labor market flexibility to attract FDI (Yu and Walsh, 2010).
    - Qatar emphasizes PPP to attract FDI—PPP needs to be mindful of fiscal risk.
    - Maximizing domestic spillovers from FDI is key; building local technology over several decades contributed to Korea’s success.
    - Qatar’s patent applications started to increase rapidly; boosting R&D spending could continue the strong trend.
  - Competitive environment:
    - Qatar’s manufacturing exports are relatively low and may be below potential, leaving significant upside to grow.
    - Reduce the state’s footprint, upgrade regulatory environment, and ensure level playing field to facilitate private investment and boost production of more complex products.
    - Intense domestic and international competition amid export pressures underpinned Korea’s success.
    - Qatar’s trade conditions are favorable with many trade and other agreements and generally low trade barriers.
    - Further foster trade diversification by reducing remaining tariff and non-tariff barriers, exploring new trade corridors (Middle Corridor from China to Europe; India-Middle East-Europe Corridor), and investing in the digital economy.

### Vertical policies: DOs and DO NOTs
- DOs:
  - Vertical policies should be targeted, time-bound, cost-effective, transparent, and deliver on objectives.
  - Social goals should be clearly identified (e.g., emission reductions).
  - Domestic knowledge spillovers from innovation in targeted sectors should be strong.
  - Ensure sufficient administrative capacity.
  - Conduct proper cost-benefit analysis and impact evaluation, with strict exit criteria, claw-back mechanisms, and sunset clauses to minimize risks and phase out policies as needed.
  - Targeted interventions should not substitute for broad-based structural reforms, which should continue to be rolled out.
- DO NOTs:
  - Avoid vertical policies that create negative effects on macroeconomic, fiscal, and external sustainability.
  - Avoid generating negative cross-border spillovers, harming trading partners, or violating international commitments.

### Key empirical and statistical notes
- Distance empirical minimum value: around 0.4-0.5.
- Korea’s shortest distance: around 0.7.
- Korea ECI values: 1995 (ECI = 0.85); 2021 (ECI = 1.93).
- For Qatar, feasible opportunities are relatively distant, close to 1 (the maximum in the framework).
- Figure 9 indicators and trends highlighted:
  - Annual FDI Commitments by Sector (US$ billions, period average) and by Industry (percent of total non-hydrocarbon) show rising shares for Chemicals and IT/software.
  - R&D Spending and Economic Complexity: R&D spending (%GDP, log, 2020 or 2021) plotted against Economic complexity index (2021).
  - Total Patent Applications (Per one million population) show Qatar’s patent applications jumped in the last decade.
  - Indicators of Trade Barriers, 2021: tariff and non-tariff barriers and time cost of importing/exporting reported as deviations from 165 country-mean in standard deviation.
  - Estimated Manufacturing Export Gaps reported as percent of potential.
- Annex I tables:
  - Determinants of Mid and High-tech Exports: pooled and fixed effects models with number of observations up to 2,080; R-squared up to 0.622; Economic complexity index coefficients range in reported models (e.g., 1.374***, 0.840***, 0.723***, 0.869***, 0.807***, 0.764***, 1.017***, 0.918***, 1.010***, 1.028***, 0.946***).
  - Determinants of Per-capita Real Income: Economic complexity index coefficients reported across models (e.g., 0.714***, 0.134***, 0.098***, -0.103, 0.328***, 0.141***, -0.069); interaction terms Economic complexity x physical capital (0.119**; 0.122**), Economic complexity x human capital (0.068*; 0.069*); Number of observations up to 1,316; R-squared up to 0.685.

### Concluding remarks
- Empirical analysis and country experience suggest Qatar could boost growth potential by building a knowledge-based economy focused on enhancing export diversification into higher technology manufacturing products.
- Policy priorities include:
  - Focusing beyond sectors with current comparative advantages to develop sectors with high complexity.
  - Strong focus on attracting and developing human capital, technology, private sector investment into high value-added non-hydrocarbon activities, and fostering a competitive environment.
  - Carefully assessing the role of services to support high value-added manufacturing exports and long-term growth potential.
  - Weighing benefits of vertical policies against potential pitfalls and ensuring complementariness with horizontal reforms.

*Source: IMF staff chapter content (sipea2025017).*

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_Source: https://www.imf.org/-/media/files/publications/selected-issues-papers/2025/english/sipea2025017.pdf_