The Impact of Fiscal Policy on the Gross Domestic Product as One of the Indicators of Economic Development in Iraq Between 2004-2020

Abstract

Fiscal policy is a major part of economic policy and a tool for implementing the government's economic policy toward achieving the set goals. This is done through its main tools (public expenditures, revenues, and the net budget). This is to raise economic growth rates, achieve economic well-being, and satisfy the desires of society. The study shed light on the most important developments in fiscal policy in the Iraqi economy and its impact on economic development. On this basis, the researcher seeks to clarify the role of fiscal policy in Iraq (2004-2020) through its tools in achieving economic development and how to use them to achieve these indicators. Moreover, a statement of the efficiency of fiscal policy and its management towards the economic and social fields to ensure the advancement of the goals and indicators of economic development. Therefore, it must be used optimally and planned. Moreover, what Iraq went through in terms of political and financial crises, especially after 2003, prevented the use of this policy optimally, which led to a decline in the performance of fiscal policy in order to achieve economic development. The study reached a set of conclusions, the most important of which was the direct correlation of the GDP indicator with the oil sector and the low percentage of tax revenue contribution to the total public revenues throughout the study period due to rampant corruption and inflexibility of the tax system. While the results showed no long-term relationship between public expenditures and the GDP indicator due to the decline in investment spending, this is offset by an increase in operational spending due to the large employment in government departments and the deterioration of the security situation. At the same time, the study recommended working to increase the volume of public revenues by developing plans to diversify revenue sources, especially in the non-oil (commodity) sectors, in a way that increases the size of the general budget and working on an annual evaluation of fiscal policy tools and their effectiveness in achieving economic development in Iraq.