Brunei Darussalam’s Economic Diversification Drive: An Assessment of the Socioeconomic and Geopolitical Issues and Challenges. Overcoming Path Dependence?

Abstract

This chapter uses an institutionalist approach to present an assessment of the key issues Brunei Darussalam currently faces in relation to its pressing need for economic diversification. Given that institutional arrangements can hinder or enhance economic growth, the institutional approach has been central in explaining policies associated with economic growth and development in various countries. The approach also offers a wealth of literature that can be used to explain Brunei’s difficulties in reducing its long-standing dependency on hydrocarbons, the extent to which institutions play a role in its economic development and in understanding the complexity of Brunei’s political economy. The discussion does not claim to provide a solution to Brunei’s economic diversification problem but rather offers some contextualisation that can be of benefit to scholars and policymakers in understanding its symptoms. The chapter also addresses current geopolitical issues and the increasing interconnectivity between Brunei’s international relations and economic diversification as it attempts to attract more foreign direct investment.