A diversified economy is an economy that has a number of different revenue streams and provides nations with the ability for sustainable growth because there is not a reliance on one particular type of revenue. This diversification provides nations with the security and reliability that they need so that if one economic revenue stream should fail, the nation knows that they have several other options for revenue.
In 2014, the countries that are a part of the Gulf Cooperation Council, known as GCC, met to discuss the importance of diversification in their economic development and in the role of the state. The conference brought the countries of Bahrain, Qatar, Oman, Kuwait, the United Arab Emirates and Saudi Arabia together. Throughout the conference, international experts and academics shared their thoughts on ways that the nations could grow their economies and build a sustainable, reliable revenue stream.
The common consensus at the meeting was that these nations needed to create a non-oil tradable sector in addition to competitive business environments in their nations in order to get the desired economic growth. Economic diversification takes the dependence on oil and low-wage expatriate labor and refocuses it on all economic activity. In fact, the researchers were able to point to empirical evidence that lists diversification as one of the primary reasons that economies are less likely to go through economic volatility.