IDEAS home Printed from
   My bibliography  Save this article

Natural Resource Depletion, Productivity and Optimal Fiscal Strategy: Lessons from a Small Oil-Exporting Economy


  • Abdullahi D Ahmed
  • Said Al-Saqri


: Dependency on oil income in many resource-exporting open economies threatens the ability of their economies to sustain GDP growth when oil income runs low or when oil resources are depleted. This paper attempts to appraise the efficiency of the Omani economy and its fiscal sustainability in relation to oil income. Firstly, the paper uses a neoclassical growth model to estimate the Total Factor Productivity (TFP) (technical progress and other dynamics) and the evolving relationships in factor inputs and their contribution to GDP growth in Oman. Secondly, it applies a permanent income model to elaborate on how policy makers can set path for the optimal level of government expenditure available from created wealth. It is observed that technology and improvement in efficiency induced GDP growth in Oman during the 1988-2007 period. For a higher productivity and sustainable fiscal policy, policy options include an expenditure path for the government to consume current wealth and future income from oil so that oil-based spending reduces gradually to zero by 2050. Alternatively, the government could reduce expenditure from oil revenues so that oil wealth fund is equal to the net present value of the flow of spending in 2027, where then the level of 2027 consumption is extended to 2050.

Suggested Citation

  • Abdullahi D Ahmed & Said Al-Saqri, 2012. "Natural Resource Depletion, Productivity and Optimal Fiscal Strategy: Lessons from a Small Oil-Exporting Economy," The IUP Journal of Applied Economics, IUP Publications, vol. 0(1), pages 56-80, January.
  • Handle: RePEc:icf:icfjae:v:11:y:2012:i:1:p:56-80

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:icf:icfjae:v:11:y:2012:i:1:p:56-80. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: G R K Murty (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.