Analysing of the relationship between budget deficit and production structure in Iraq

A Thesis Submitted by

Salam K. Shani

to the Council of the College of Administration and Economics  – University of Karbala

In partial Fulfillment of the Requirements for the Master Degree in Economics 

Supervised by

Asst. Prof. Dr. Mahdi S. Gailan Al-Jebouri

Fiscal Policy, In The Developing Countries In General And Especially In Iraq, Was Distinguished By Great Structural Imbalances. Since The Public Budget Of The Government Depends, To A Large Extent, On One Limited Source To Obtain The Largest Part Of Public Revenues. This Source Is The Oil Sector. As Well As The Government’s Public Expenditure Are Disequilibrium Because Of The Concentration On The Current Expenditure More Than The Investment Expenditure, This Reflect The Consumption Nature Of Government’s Expenditure. The Current Expenditures Are The Greatest Part Of The Public Expenditures.

      The Revenual Nature Of The Economy In Iraq Makes This Economy One Of  Developing Countries Economies Which Suffer From Disequilibrium In Its Productive Structure. Since Most Of Gross Domestic Product (GDP) And The Product Of Good Sectors Depend On The Oil Sector. Whereas This Sector, In Spite Of Its Importance Was Retreated In The Beginning Of The Economic Blockade, Yet The Of Her Sectors Have Only Small Portions From This Product. Due To This.

      Oil Became The Major Source Of Financing Government’s Budget As Well As In Controlling The Amount Of Public Expenditures Since The Most Exports Are From Oil Sector, Oil Exports Are The Largest During The Period Of This Study Except The Period Of The International Sanction Until Implementation Of Understanding. This Is What Made Oil The Essential Source For Hard Currency.                        

      This Study Is Based On The Assumption That The Defect Of Product Structure Through Depending On Oil Sector. This Expose The Economy To The Shocks And Its Reflection On Lowering The Public Revenue Of The Government And At Last This Will Lead To Increase The Public Budget Deficit. I.E There Is A Conversely Relationship Between Government’s Public Budget Deficit And The Growth Rate Of GDP.                                                                                

      In Order To Shed Lighton The Study Assumption. This Study Was Divided Into Three Chapters. The First Chapter Discuss The Concept Of Public Budget And Product Structure. The Second Chapter Analyse The Relationship Between The Public Budget And Production Structure In The Iraqi Economy. While The Third Chapter Analyse And Review To The Result Of The Study. The Test (VAR) Used In Analysing The Relationship Between Budget Deficit And Production Structure. This Method Is Considered One Of The Modern Methods In The Econometric. It Depends On Stability Of Time Serieses Then Test The Cointegration I.E. Wither Therese A Long-Term Relationship Between Variables Or Not Then Evaluation The (VAR) For The Variables Of This Study.