THE POLITICAL ECONOMY OF BUDGET REFORMS: EVIDENCE OF AN EMERGING MARKET

Abstract

The purpose of the paper was to investigate the socio-economic and political processes that influenced Kuwait‘s budget reforms in the wake of declining oil prices. A qualitative study and a literature review were adopted and informed by political economy theory to generate in-depth insights into similar and different socio-economic and political processes that influenced the adoption and implementation of a range of budget reforms in Kuwait. The study revealed that the budget reforms in Kuwait, as part of the austerity measures, were influenced by the dwindling oil revenues; the entrenched welfare system; the power struggles between the state actors; and the strategic partnerships and coercive role of supranational agencies, especially in creating an enabling environment for global capitalism. The paper demonstrates how the socio-economic and political environment influences and is influenced by the strategic accounting choices and practices adopted and implemented. Budget reforms in Kuwait were proposed to address the socio-economic and political realities of the day, but also, the reforms prepared fertile grounds to support global capitalism. The paper contributes to the debate on the political economy and how it is relevant in understanding the socio-economic and political processes involved in the adoption and implementation of accounting changes, especially in developing countries.