Reasons for Fiscal Problems in Muslim Countries

While the reasons that led Muslim countries into fiscal problems may vary from one country to another, there are several factors which appear to be common to many countries. Some of the major reasons are the following:

1. Big government philosophy

Historically the problems started m early 1940s. Previously the only rationale for the involvement of public finance authorities in the production of goods and services had been the provision of public goods such as defense, law and order, justice, etc. These goods and services have certain technical characteristics (indivisibility, jointness of production, etc.) which make then provision by the private sector undesirable or unprofitable. Since the society needs these goods, they had to be produced by the publ...