Crucial challenges to global and oil-rentier economies (*)

Abstract:

This article highlights the limitation of the traditional macroeconomic policies related to oil-rent crucial issues and suggests remedies for the current global financial and economic crises in view of free market efficiency principles as advocated by contemporary economic doctrines: Keynesian and Monetarism. It also reasserts the long-term alternative strategy for the liberalization of the oil-hostage rentier economies. The given analysis is based on the experience of the oil-rentier countries, as well as the fiscal and monetary policies applied in the advanced economies; especially the United States, Britain and the European Union for dealing with the current global financial crisis and economic recession. The general aim of the analysis is to establish the bases for the required confidence in market efficiency and the benefits of the globalization thrust that are not consistent with the applied remedies. It suggests that for both advanced and oil-rentier economies, heavy investment in modernizing and the expansion of the physical, social, and environmental infrastructure projects are, at this stage, essential. However, for the oil-rentier economies, more emphasis should be given to the role of the state until the objectives of the required economic diversification strategy are achieved. As the credibility and trust of the banks and financial institutions, the policy-makers, fiscal and monetary authorities and regulators are very low, it is essential to retain the confidence of business communities and consumers in the financial and economic systems by undertaking unbiased assessment of the causes, impact, and remedies of the crises for different economies.

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Keywords:

Economy

Oil Industry

global financial crisis

conventional macroeconomic policies

Monetarism

Keynesian doctrine

Iraq’s oil-rentier economy

economic-rent and market efficiency