Abstract
This research highlights the significance of economic diversification in the Iraqi economy as a response to oil shocks and its role in fostering economic development from 2004 to 2022. It primarily focuses on diversifying the production base by addressing imbalances across various economic sectors and augmenting the contribution of non-oil revenues to gross domestic product (GDP) formation. Descriptive analysis methods were employed to analyze data and information pertinent to the research topic during the specified period. Data were sourced from local, Arab, and international reports issued by entities such as the United Nations, the World Bank, as well as surveys conducted by the Iraqi Ministry of Planning - Central Statistical Organization and the Ministry of Finance -Budget, in addition to relevant previous research.Key Findings:1.Iraq heavily relies on oil revenues to fund its economic activities, particularly the general budget, while overlooking other essential sources of financing like taxes and fees.2.Revenues from crude oil sales constitute a significant portion (92%) of total revenue, rendering it non-permanent and unstable due to its close correlation with volatile global oil markets.3.Fluctuations in global crude oil prices are influenced by various factors including economic dynamics (supply and demand), population growth rates, and political events such as crises and conflicts.4.Despite improvements in non-oil revenues, oil revenue continues to dominate as the primary source for financing the state budget, with operational expenditures holding the largest share.5.Fiscal policies implemented by the government in response to the global financial crisis of 2008 resulted in austerity measures and reduced investment expenditures, adversely impacting both oil and non-oil economies worldwide.6.The study advocates for an economic diversification strategy to broaden the structure of general economic resources for the general budget, thereby reducing reliance solely on oil revenues susceptible to fluctuations and sudden shocks caused by global crude oil price volatility.7.Iraq is urged to gradually transition away from its rentier economy model and lessen dependence on oil revenues to better cope with potential political crises and conflicts, safeguarding its security and stability while prioritizing national interests above all.
