Adapting State Capitalism to Compensate for shortcomings of private sector in Iraq

Abstract

The Iraqi decision-maker decided to move to a market economy after 2003, without the private and public sectors being able to compete against the policies of economic openness. Because of the great risks, local capital has fled and at the same time foreign investment has not been attracted, so the public sector has taken on the burden of tackling unemployment, which led to disguised unemployment and the spread of corruption and bureaucracy, so it is important to search for a policy that compensates for the shortcoming of the private sector while absorbing the disguised unemployment. It is appropriate for the Iraqi economy to follow the policy of "state capitalism" as it has been followed by many countries, both at the stage of creating free economies (Japan, Switzerland, Germany) or to support the development process (China, India, Brazil), or when faced with economic crises (1929,2008) In this policy, government spending is directed towards the establishment of productive (not administrative or service) projects that aim at profit and generate a capital accumulation that can support the government budget and absorb the surplus workers (disguised unemployment), especially since these projects have been examined by the (Nation Investment Commission), will be protected by government policies, as well as lower labor costs, mainly driven by the government budget, and the ultimate goal is to create a competitive production sector that Iraq can then sell to the private sector. Keywords: State Capitalism, General Policy, Economic Reform, Iraqi policy, Economic transition, Financial Policy, Government Investment, Government Projects