Economic Development

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Economic development Is an activity directed to achieve maximum human welfare in all its manifestations and permitted to build a nation in the areas religiously required to turn in the world, in terms of the legitimacy of the development goals including: good preparation rights and building society with a proper level of a decent life for all members, in addition to building economic strength so that the adequacy of the nation in all the different areas of production (Beck, 1981). Government expenditures which are incurred by all governments are the money that a government spends in order to maintain its own functioning as well as promoting the wellbeing of the society and the economy as a whole. However, the expanding of government activities over time makes it more and more difficult to distinguish which portion of government expenditures goes to the maintaining of the government itself and which portion goes to the benefit of the society and the economy more generally. In addition, government expenditure to improve economic and social wellbeing takes two different forms.

Increasing the size of the government and more specifically the size of government expenditure, through history has been shown to follow an upward trend.And yet the study of government expenditure remains relatively unexplored in the economic literature. As Lowell Harris (1958) says "the economists have generally concentrated their attention on the theory of taxation. The theory of public expenditure has been more or less confined to generalizations in terms of the effects of public expenditure on employment and prices etc" (p. 261).

The Kingdom of Saudi Arabia possesses one of the largest economies in the Middle East. Its Gross Domestic Product (GDP) reache...

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...ivities of those sectors. The planners followed policies to reduce the impacts of oil price fluctuations on the growth of non-oil sectors, with emphasis on strengthening the financial positions of some banks, and reduce the restrictions that hinder the start of service sectors such as tourism, helped by the increase in exports achieved as a new petrochemical and gas natural.

As seen years from 2005 to 2007 increase in income during the period of recovery in oil prices, had been allocated to finance public expenditures, but had been allocated to strengthen the reserves of cash, or allocated for the payment of some domestic debt in a reference to public expenditure policies (Ministry of Economics and Planning, 2007). In this thesis we are using the time – series data for period from 1968- 2009, to study the three theories for government expenditure in Saudi Arabia.
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