CONCLUSIONES Y RECOMENDACIONES

Among the developing economies, Oman provides a notable example of the state combining the market and planning strategies to secure long-term development objectives with minimal generation of conflict. The attainment of these objectives and the means by which they were secured are discussed in Chapters IV, V and VI. Here only a brief summary of the roles of planning and market in Oman’s development is necessary.

As in other oil exporting countries, economic rents earned from production and export of oil constitute a substantial share of national income in Oman, and this is realised through the state. The resources generated by oil exports are used by the state for the development of the economy through development planning. The benefits flowing from national assets created by the plans (electricity, water, industrial infrastructure, gas, petroleum products, etc.) are distributed through the functioning of the price system. The use of these basic inputs and access to state sponsored financial institutions encourage growth of private enterprises in agriculture, industry, and a relatively large service sector.

The revenues derived from the export of oil have enabled the government in Oman to maintain an open economy, with imported consumer goods, capital equipment and

technology flowing into the economy without any significant tariff barriers. Quota

restrictions are almost non-existent. The exchange rate of the Omani Rial is pegged to the US dollar and the Rial is freely convertible, without any foreign exchange restrictions. Exports are encouraged while imports are not discriminated against. As a result, high consumer welfare has been achieved so far without the creation of any substantial industrial sector. In other words, the welfare-oriented approach of the state complements both plan and market to secure social and economic development.

From the mid 1970s, Oman has adopted development planning which is implemented through successive five-year plans. The methodology of planning in Oman is briefly explained in Appendix 3-AI. The main long-term strategic goals underlying these five-year development plans are (Oman, 1976a):

a) to bring about sustained improvement in the quality of life,

b) to reduce dependence upon oil exports by diversifying the economic base through

accelerated growth of the non-oil sector,

c) to develop human resources,

d) to promote balanced regional development,

e) to sustain a free market and competitive economy.

f) to follow a free trade policy, with minimal restrictions on inflow and outflow of goods, services, capital and technology.

The purpose of development planning in Oman is not to supplant but to supplement and stimulate the market. Attainment of plan objectives in Oman does not involve any physical or price controls or any fiscal “carrots and sticks” for private sector activities. Nor does it involve any strict demarcation of areas of activities for the public and private sector. Apart from some restrictions on the inflows of foreign capital and labour, the economy of Oman is almost completely open to the rest of the world so far as the flow of goods and non-factor services are concerned.

The essential role of development planning in Oman is to promote investment in sectors providing public goods, to formulate and execute projects involving large scale externalities, and to build up social overheads entailing low rates of return. Since the private sector would be disinclined to undertake these activities, the growth of public investment through development plans did not result in ‘crowding out’ private investment in the relevant activities. In fact, the income-generation and threshold-creating effects of public investment has led to ‘crowding in’ of private investment as we shall see in the following three chapters. It is in this sense that planning in Oman has supplemented and not supplanted the market mechanism and the private sector.

In addition to socio-economic development, planning in Oman has also facilitated regional development. Within the framework of the long-term development strategy a general policy for town planning was approved by the Cabinet^ in 1988. The main elements of town planning policy include: specification of standard physical planning

criteria and policies; harmonisation of policies and measures relating to land use;

provision of social structures and public utilities on a national, regional and local level; and

planning and programming of available resources. The policy intends to provide

consistent physical and regional development plans and realise the long-term development

’ The Council o f Ministers.

objectives, including protecting the environment and preserving natural resources (Oman, 1991a;pp.223-251).

To facilitate implementation of town planning policy a “Main Town Strategy” has been adopted. The strategy aims to direct investments to a number of main towns to increase the effectiveness and efficiency of these investments through economies of scale and also to create on the one hand, backward and forward linkages between the main towns and on the other, between the regions and the local centres and the main towns.

As a result, both the Third and the Fourth FYP allocated large amounts for development of a number of main towns, such as Nizwa, Sur, Al-Rustaq and Sohar (/Z>/^f.;pp.359-363).

To monitor implementation and provide overall guidance, the Supreme Committee for Tovm Planning was set up in 1985 (Oman, 1995c:p.99) and a number of regional committees, such as the Musandam Development Committee and the Regional Development Council were established by the Development Council.