ABSTRACT
The rentier state is defined by the ‘rents’ (external income) that theoretically free the government of dependence on the population for financial resources. By definition Oman became a rentier state in 1967 with the first exports of oil, but Oman was the beneficiary or victim of generally fluctuating oil revenues throughout the period between 1970 and 1996. This factor it had in common with its Gulf neighbors, although Oman’s economic situation was very different in three important ways from those neighbors. First, Oman never had the tremendous surpluses of income of Saudi Arabia, Kuwait, or the United Arab Emirates so that the government has always had to act within some financial constraints. Second, Oman possessed a variety of other resources, albeit in very limited quantities, such as minerals, agriculture, and fisheries, that have provided the hope for some kind of diversification and an end to dependence on oil. Third, as described in the previous chapter, the merchant class has not been supplanted by the royal family so that there has been internal pressure to keep the economy ‘open’. This has been most noticeable in another area of diversification, industrial development, where the government has been most active in encouraging and supporting activity largely in the private sector. This chapter examines the development of natural resources and industry and attempts at economic diversification within the sultanate.
