Governance and economic efficiency in the management of oil revenues in Algeria

Abstract

The aim of this study is to investigate relationship between the governanceindicators, and fiscal policy in place and the manner which oil revenuesmanaged in Algeria. The present study using descriptive and analyticalapproach .Algeria has suffered since its independence from pro-cyclical fiscal policy,resulting from the fluctuation of revenues, where the decision-makers didunable to achieve economic diversification in spite of the accumulation ofconsiderable financial surpluses during periods of booming oil market, andthe disposal of the dependency for the oil sector, which refers to not optimallyexploit the financial surpluses during the boom .Over time, oil revenues in Algeria have become the core and basis of politicsin general, and the cornerstone of economic policies in particular. Usuallyhigh rents in developing countries accompanied with the bad governanceindicators. The result shows that the problem in Algeria is the non-applicationof standards of governance (activating of the control and regulatory role ofgovernment, elimination of corruption, provide a democratic environment thatallows transparency and accountability) in the management of oil revenues,which led to inefficiency exploitation of these financial surpluses, and theemergence of some negative phenomena such as: the spread of corruption andthe decline of good governance indicators.