<p>Oman’s national development strategy envisages the development of a dynamic private sector that will undertake a leading role in the nation’s development. The strategy portrays the existence of a self-reliant private sector as a sine qua non of sustainable growth, while the Government of the Sultanate of Oman (GOSO) reasserts itself as a provider of “strategic guidance” in the development process. In short, the GOSO sees the private sector as the main thrust of the nation’s future growth.</p>
<p>However, there are numerous challenges to the realisation of this vision. One of the most formidable challenges that Oman faces is dealing with rentier tendencies and dependency of the private sector resulting from the long-term dominance of the government in the economic sphere and the lack of private sector initiatives therein. Indeed, the government’s dominance in the economic sphere tends to crowd out private sector initiatives.</p>
<p>It was inevitable that the GOSO assumed the role of the growth engine due to Oman’s commodity-based economic structure. The problem, however, is that this economic structure did not produce sustained growth. Although Oman was successful in broadening private sector participation in its economic activities, as evidenced by the fact that the share of private investment almost doubled to 8.6% in 2000 from 4.4% in 1995, the growth was not sustainable.</p>