Lifting productivity in Oman: The Role of Structural Reforms

Selected Issues Papers, June 13, 2024

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Oman’s potential nonhydrocarbon real GDP growth has trended downward since the global financial crisis, with a negative contribution from total factor productivity.
The paper estimates productivity gains associated with structural reforms and identifies key binding constraints and reform priorities to boost productivity in Oman.
The findings are intended to inform the planning and implementation of the ongoing structural reform agenda envisaged under Oman Vision 2040.

Reforms to reduce the state’s footprint and strengthen institutions, as well as product market reforms, should be prioritized.
Packaging these reforms together magnifies productivity gains from labor market and financial sector reforms.
Total factor productivity has been a negative contributor to potential nonhydrocarbon real GDP growth since the global financial crisis.

Prioritize reforms that reduce the state’s footprint.
Strengthen institutions to support a more productive and efficient economy.
Implement product market reforms to enhance competition and efficiency.
Package state-reduction and institutional/product market reforms together to amplify the effectiveness of labor market and financial sector reforms.

The analysis and recommendations could inform the planning and implementation of the ongoing structural reform agenda envisaged under Oman Vision 2040.
The paper focuses on lifting productivity in the nonhydrocarbon sector to reverse the downward trend in potential nonhydrocarbon real GDP growth and address negative contributions from total factor productivity.