Oman - the Economy

Oman - the Economy

Omani economic development may be divided into three phases: a period of rapid expansion between 1970 and 1986; economic retrenchment and rationalization between 1986 and 1989 as a result of the 1985-86 oil price collapse; and a period of stabilized growth since 1990. Economic growth and structural change have proceeded rapidly in Oman during the rule of Sultan Qabus ibn Said. Oman, however, lagged behind such neighboring gulf amirates as Kuwait and the UAE as a result of the late discovery of oil, financial constraints, and political instability in the first half of the 1970s. Nonetheless, increased government expenditure as a result of the commercial production and export of oil transformed the standard of living in Oman. By the latter half of the 1980s, Oman emerged as a middle-income country after entering the development process as one of the poorest Arab states. Per capita income rose from US$360 in 1970 to US$3,140 in 1980 and to US$7,000 in 1991.

When Sultan Qabus ibn Said assumed power in 1970, he immediately implemented an economic development and modernization program. Priority was given to expanding the country's almost nonexistent infrastructure. In the early 1970s, substantial progress was made in developing physical and social infrastructure, mainly in the form of roads, a new deepwater port, an international airport, electricity-generating plants, desalination plants, and schools, hospitals, and low-cost housing. Government revenue derived almost exclusively from oil receipts made this possible.

Economic growth was accompanied by uneven structural development, however. In 1960 agriculture accounted for 75 percent of the gross domestic product; by Oman's fiscal year 1991, its share had fallen to less than 3 percent. By contrast, industry (including petroleum), which accounted for only 8 percent of GDP in 1960, increased to 59 percent by 1985. Manufacturing increased only from 1 percent to 3 percent and services from 18 percent to 38 percent in the same period.

As a result, in 1993 Oman's economy was dominated by the petroleum sector and the services sector. Aware of the vulnerability produced by dependency on a depletable natural resource, the government has increased funding for sectors based on renewable natural resources that can provide sustainable economic growth. The government is concentrating on the agriculture and fishing sectors, encouraging tourism, and constructing light industrial parks with the objective of exporting consumer goods to its Gulf Cooperation Council (GCC) partners.

http://countrystudies.us/persian-gulf-states/
https://en.wikipedia.org/wiki/Persian_Gulf


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