The Effect of Fiscal Policy on Economic Development of Gulf Cooperation Council Countries
Keywords:
tiger economies, fiscal policy, Economic development, public expenditureAbstract
Fiscal policies can be defined as instruments that governments use to control economic development and growth. GCC countries consist of six Asian countries namely: Bahrain, Kuwait, United Arab Emirates, Oman, Kingdom of Saudi Arabia and Qatar. The most common fiscal policy instruments that a government can use to manage its economic development are three: taxation, public debt and government expenditure. Not much has been done on the GCC countries. This is the knowledge of GCC economics that the study
presents. The objective of the study was to determine the effect/ impact of fiscal policy on economic development of GCC countries. In order to achieve this objective, the researcher used time series data from 1990 to 2011. The GNP per capita growth rate was used as a dependent variable while taxation and public expenditure were used as independent variables. The results of the analysis indicated that only Qatar had a direct positive impact between fiscal policy and economic development as it was expected. Therefore, a combination of policies is recommended in the case of GCC countries for desirable economic development to be achieved.
