Economic Diversification through Innovation:
Sequencing Value-Chain Entry and Strengthening Innovation Ecosystems in Resource-Dependent Economies

Abstract

Abstract
Purpose – hydrocarbon-dependent economies face a dual diversification challenge: selecting feasible footholds in high-tech value chains and building local innovation ecosystems that can sustain those activities. Anchored in economic diversification theory (Neoclassical vs. Evolutionary growth, Developmental and Rentier State models) and modern Smart Specialisation policy, this study asks how a hydrocarbon-dependent economy can (i) sequence entry into robotics sub-sectors and (ii) reinforce the ecosystem capacities required for durable growth.

Methodology – A qualitative design integrates two conceptual layers: (a) sequencing logic from Product Space theory operationalised through a seven-pillar, equal-weight multi-criteria decision model (MCDM), and (b) ecosystem diagnosis using an expanded Hoffecker–Rubenstein Local Innovation Ecosystem Model (HR-LIEM). Evidence draws on 23 elite interviews, a 92-organisation network map, and documentary triangulation. A synthesis matrix (Figure 4-17) distils propositions P1–P12, linking segment rankings to diffusion mechanisms, indicators and action levers.

Findings – Four “kick-starter” niches–system integration, End effectors, robotics software and final assembly – offer the lowest barriers and highest spill-over potential. The ecosystem excels at innovate, connect and train roles, backed by sovereign capital and giga-project demand, yet remains single-threaded in share knowledge, convene and advocate functions. Redundancy, not resources, is the binding constraint. “Gatekeeping thresholds” align escalation timing with capability maturation. A robotics council, blended-finance match window and mid-tier apprenticeship ladder are identified as catalytic interventions. Theoretically, the study contributes a layered framework that fuses diversification theory, Smart Specialisation, and innovation-ecosystem models with sequencing logic, demonstrating how mission-oriented, sovereign-wealth contexts reshape canonical ecosystem dynamics.

Implications – Policymakers should target connective institutions; firms should prioritise the four mid-stream niches and co-invest in standards and skills. The analytical framework is transferable to other innovative sectors (e.g., laboratory diagnostics, unmanned aerial systems, etc.) and jurisdictions where state capital and mission demand dominate. Scholars gain a replicable toolkit linking value-chain selection to ecosystem diagnosis and offering a conceptual bridge between diversification theory and ecosystem orchestration.