Oman ranked fourth for Economic Freedom in Arab world

By V L Srinivasan

Muscat – Oman has been ranked fourth among the 22 Arab nations in terms of Economic Freedom, the annual report of the Economic Freedom of the Arab World : 2009 said.

While Bahrain has occupied the top slot, the second place has been shared by Kuwait and Lebanon, according to the report, which was released at the annual meeting of the Economic Freedom of the Arab World held at Marrakech on November 14.

Bahrain had the best overall score of 7.9 out of 10. Kuwait and Lebanon, which finished first and second in 2008, tied for second with a score of 7.8 this year while Oman secured 7.7 points. Incidentally, the sultanate was numero uno a couple of years ago but slid to third place last year and is now ranked fourth this year.

The report was produced by the Fraser Institute, one of Canada’s leading economic think tanks, along with the International Research Foundation of Oman and the Cairo office of the Friedrich Naumann Foundation for Liberty.

The Economic Freedom of the Arab World: 2009 Annual Report compares and ranks the Arab nations in five economic freedom areas: size of government; commercial and economic law and security of property rights; access to sound money; freedom to trade internationally, and the regulation of credit, labour, and business.

“There is nothing to panic as one should consider rating rather than ranking as the first denotes the actual measure of economic freedom while the second one only gives its position. The reason for the sliding can be attributed to the fact that other countries are improving faster and hence appear higher in the rankings,” OCIPED CEO Dr Salem Ben Nasser Al Ismaily, who authored the report, said.

According to him, Oman's weakest point is the size of the economic activities implemented by the government which is still considered very high compared to that of private sector. The private sector needs to grow more in different areas especially the services.

“In order for Oman to become competitive globally, the private sector should be the engine of growth. With a strong private sector, there will be continued investments and job creations which would generate growth. In a world where markets and supply of goods and services are very much integrated, it is necessary for the Omani private sector to be strong and competitive without relying too heavily on government supports and hand outs,” he felt.

Director of the Globalisation Studies at Fraser Institute Fred McMohan said that the closeness of the scores of these top four suggested a virtual tie for the overall top spot since all four countries are within 0.2 points of each other. “The Gulf States have achieved the highest level of economic freedom in the Arab world but this is not necessarily due to their oil wealth,” he said.

He went on to add: “Wealth from oil production and export presents a great temptation for governments to overspend and crowd out private-sector economic activity but the Gulf States have worked to open their economies internally and externally to world trade and this is a credit to governance in the region.”