2022, Video: "hile it is indispensable to address the negative effects of the crisis in the short term, longer term structural transformation strategies are needed in view of the major developments associated with the digital revolution and decarbonization. First, at the climate change level, with the low-carbon technology diffusion, the advancement in renewable energy and the unprecedented mushrooming of environmental agreements, the demand for fossil fuel is destined to decline, leading to an eventual “stranded assets” problem for MENA. A stranded asset can be defined as a resource that once had value or produced income but no longer does, usually due to some kind of external change, including changes in technology, markets and societal preferences. This is why, currently, the term “stranded assets” is most commonly used to describe oil and gas resources that have not yet been extracted, but which appear as assets on companies’ ledgers and a few countries’ balance sheets. Therefore, MENA economies need to undergo major restructuring and diversification away from their heavy direct and indirect dependence on fossil resources as the prime engine of growth. Second, with the new industrial revolution and the digital transformation the world is experiencing, a new development model should be adopted by MENA countries to better integrate into the global economy and to make their economies more competitive and more agile."
HKS Faculty Author - Dani Rodrik