The path of privatization and diversification is the cornerstone of Oman’s economic strategy. From successfully implementing several infrastructure projects, the country is enjoying increased attention from investors and benefiting from high foreign direct investment (FDI) inflows, which, according to Global Investment House, rose from $122.3 million in 2002 to an estimated $705.3 million in 2006. Increased returns from non-oil activities showed not only the health of the country’s business environment, but also the success of its diversification policy, which began as a hedge against over-dependence on Oman’s natural resource endowments. However, the country’s budget continues to benefit from oil revenues, encouraging public spending, which does not appear to pose a threat to price stability. Inflation registered smaller than its Gulf neighbors at about 3.2% in 2006. The figure partly reflects “the effects of high growth in the face of capacity constraints, in addition to the sustained influence of imported inflation
